iirli 


HOW  TO 

COLLECT  MONEY 

BY  MAIL 


327  TESTED  ANS,  LETTERS 
AND  SCHT"  ^^>  THAT  MAKE 
THE  MAIL  1    .NG  MONEY  DUE 


HP   . 
HI 


HOW  TO 

COLLECT  MONEY 

BY  MAIL 


HOW  TO  WRITE  EFFECTIVE  COL- 
LECTION LETTERS— TESTING  COPY- 
PLANNING    A    SERIES— RETAIL.     INSTAL- 
MENT AND  DEALER  ACCOUNTS— CREDIT 
SYSTEM— COLLECTION  SCHEMES  AND 
LEGAL    STEPS  — HOW    CREDITORS 
COOPERATE  TO   CURE    "SLOW 
PAYS"  AND  BAD  ACCOUNTS 


157  MONEY  GETTING 
PLANS  ADOPTED  BY 
43  CORRESPONDENTS 


A.  W.  SHAW  COMPANY 

CHICAGO  NEW  YORK 

A.  W.  SHAW  COMPANY,  Ltd..  LONDON 


1913 


THE  MAGAZINE  OF  BUSINESS 

SYSTEM  "HOW-BOOKS" 

How  TO  Increase  Your  Sales 
How  TO  Increase  a  Bank's  Deposits 
How  TO  Systematize  the  Day's  Work 
How  TO  Increase  the  Sales  of  the  Stork 
How  to  Sell  Real  Estate  at  a  Profit 
How  to  Sell  More  Life  Insurance 
How  TO  Sell  More  Fire  Insurance 
How  TO  Write  Letters  that  Win 
How  TO  Talk  Business  to  Win 
How  to  Write  Advertisements  that  Sell 
How  to  Sell  Office  Appliances  and  Suppliss 
How  to  Collect  Money  bv  Mail 
How  to  Finance  a  Business 
How  to  Run  a  Store  at  a  Profit 
Others  in  Preparation 

FACTORY  "HOW-BOOKS" 

How  to  Get  More  Out  of  Your  Factory 
How  Scientific  Management  la  Applied 
How  to  Get  Help 
How  to  Cut  Your  Coal  Bill 
How  to  Handle  Workmen 
How  to  Systematize  Your  Factory 
Ot       •  in  Preparation 

STANDARD  VOLUMES  AND  SETS 

THE  KNACK  OF  SELLING 

{In  Six  Books) 


BUSINESS  CORRESPONDENCE  LIBRARY 

(Three  Volumes) 


BUSINESS  MAN'S  LIBRARY 
{Ten  Volumes) 


BUSINESS  ADMINISTRATION 


BUSINESS  MAN'S  ENCYCLOPEDIA 
(Two  Volumes) 


THE  SYSTEM  OF  BUSINESS 
{Ten  Units— Thirty  Volumes) 

In  Preparation 


ml  MAtAZJNE  fl/MANAC£M£WT 


Copyright,  1913,  by 
A.  W.   SHAW   COMPANY 


CONTENTS 


PART   I 
PERSONALITY  LETTERS  THAT  SETTLE  MOST  ACCOUNTS 

Make  Your  Letter  Talk 

Cbaptek  Page 

I    How  TO  Rouse  the  Wilx,  to  Pay 7 

II    How  TO  Write  a  Collection  Letter 16 

III  Persuading  Dealers  to  Pay  up 26 

IV  Collecting  Retail  Bills  by  Letter 34 

V    How  to  Line  up  Instalment  Accounts 40 

VI    Blocking  out  a  Letter  Campaign 46 

PART  II 
TESTED  SCHEMES  FOR  SPECIAL  CASES 

Set  Him  Thinking 

VII    Effective  Appeals  to  Debtors       59 

VIII     Enclosures  That  Reinforce  Your  Letter     ....      65 
IX    Details  to  Watch  and  Errors  to  Avoid 69 

PART  III 
WHEN  AND  HOW  TO  FORCE  PAYMENT 

Set  the  Pace 

X  Personal  Work  That  Saved  Bad  Accounts  ....  75 

XI  How  Far  Can  I  Legally  Push  Collections?     ...  79 

XII     How  Creditors  Work  Together 84 

XIII  Handling  Collections  through  an  Attorney    ...  94 

PART  IV 
HOW  TO  KEEP  YOUR  LISTS  AND  RECORDS 

Keep  Dovm  the  Burden 

XIV    How  Credit  Records  Hold  Down  Bad  Accounts      .     101 
XV    Making  Collection  Routine  Automatic 108 


4  CONTENTS 

PART  V 
CUTTING  COLLECTION  COSTS 

Test  and  Temper 

Chapter  Page 

XVI    Economies  That  Increase  Profits 117 

XVII    Tests  That  Show  Your  Strongest  Letters      .     .     .  124 

COLLECTION   METHOD   CHARTS 

Chart  Page 

I    make  tour  letters  classify  tour  debtors      ....  6 

II      CREDIT   information   AND   ITS   SOURCES 14 

III  FITTING   TOUR   LETTER  TO  TOUR  MAN 18 

IV  HOW   TO  SELECT  A   COLLECTION  APPEAL 21 

V      HOW   TO   WATCH    DEALER  ACCOUNTS 28 

VI      COLLECTING   BT   LETTER   FROM   DEALERS 30 

VII      HOW  TO  COLLECT  FOR  THE  RETAIL  STORE 36 

VIII      HOW  TO  COLLECT   DIFFICULT  INSTALMENT  ACCOUNTS  ...  42 
IX      HOW  TO   GET  BETTER  RETURNS  FROM  THE  COLLECTION 

CAMPAIGN 48 

X      COLLECTION  SCHEMES  WHICH   BRING   IN   THE  MONET    ...  58 

XI      HOW  TO  CROWD  THE   DEBTOR   INTO   PATMENT 74 

XII      LEGAL  POINTS   TO   WATCH 81 

XIII  HOW   TO   COOPERATE    WITH    OTHER   CREDITORS 90 

XIV  HOW   TO   USE   THE    COLLECTION    LAWYER 97 


COLLECTION    FORMS 

Form  Pagb 

I  RETAIL  CREDIT   ASSOCIATION  RATING   SHEET 87 

II  ASSOCIATION   CREDIT  RATING  CARD 92 

III  CORRESPONDENCE   CARD  AND  INDEX 96 

IV  WHOLESALERS   CREDIT   CARD 100 

V  RETAILERS   CREDIT   GUARANTT   FORM 102 

VI  ENVELOPE   FOR   FILING   CREDIT   INFORMATION 103 

VII  INSTALMENT   HOUSE  QUESTION    BLANK 105 

VIII  INSTALMENT   LEDGER  CARD 104 

IX  WHOLESALE  CREDIT  STATEMENT   BLANK 106 

X  COLLECTION  CORRESPONDENCE   CARD 110 

XI  CORRESPONDENCE   ENVELOPE   WITH   DOUBLE   TICKLER   .      .      .  Ill 

XII  RETAILERS  COLLECTION   CARD Ill 

XIII  READT    REMINDER   FOR   INSTALMENT    BUTEB8 112 

XIV  NOTICE   OF    PAYMENT   PLAN 113 

XV  SCORING    THE   COLLECTION    LETTER 117 


Part  I 


PERSONALITY  LETTERS  THAT 
SETTLE  MOST  ACCOUNTS 


Make  Your  Letter  Talk 

]\/f  EN  neglect  at  long  range — they  cheat  in 
^  •*  the  crowd.  It's  the  stranger  that  is  sent 
off  with  scant  consideration. 

When  a  man  dodges  payment,  he  dodges 
creditors.  Neighbors  are  easiest  remembered — 
close-at-home  debts  are  first  paid. 

Get  close  to  your  man.  Keep  your  debtor 
in  sight.  In  your  letter,  "talk  it  over"  with 
him  personally. 

Most  accounts  are  lost  because  the  debtor 
feels  sheltered  by  the  mass — because  your  let- 
ter comes  as  one  of  hundreds  put  out  to  delin- 
quents you  follow  in  droves. 

Make  the  man  who  owes  you  money  feel 
your  presence.  Stand  him  out  alone.  Get  to 
him   with  your  reminder  on   the  day. 

Talk  to  him  man  to  man.  Make  his  debt  a 
matter  between  neighbors.  Keep  a  shrewd 
but  kindly  eye  upon  him.  Let  your  letter 
show  'precisely — undeniably — why  it  is  an  advan- 
tage to  him  'personally  to  pay  you  in  particular. 

Go  to  him  with  your  letter  as  you  would 
in  person.  Let  him  feel  that  you  know  and 
read  him. 

Make  your  letter  talk. 

Ba  b3 


■  ii: 


:ii« 


MAKE  YOUR  LETTERS  CLASSIFY 
YOUR  DEBTORS 


When 

Your 

Debtor 

Seems 


Remind 
Him  That 

Good 
Pay 

Slow 
Pay 


BecauBe  He 
Is  Careless 


Tighten 

— ]    Up  on 

Him  by 


Because 

Payment 

Is  Not 

Convenient 


Show 

Reason 

for 

Paying  by 


Bad 
Pay 


Because  He 
IsDissatisfied 
with  Purchase 


Re-sell 
Him  by 


Your  Accounts  Must  Be 

Kept  Straight 
He  May  Have  Overlooked 

BiU 
You  Need  Money  for 

Special  Purpose 
Small  Accounts  Must  Be 

Closed  Promptly 

Hinting  at  More  Drastic 

Measures 
Threatening  to  Put  Him  on 

Cash  Basis 
Following  Up  More  Closely 
Shaming  Him 

Offering  Inducemeott 
Holding  Up  Orders 
Showing  Mutual  Gain 
Showing  His  Loss  in 
Slow  Pay 

Using  Tact  and  Patience 
Giving  New  Proof  of  Value 
Re-awakening  Need  for 

Goods 
Satisfactorily  Adjusting 

Complaint 


Thinks  He 
Can't  Pay 


J      Help     |_ 
Him  by 


Because 
Intentions    |— 
Are  Dishonest 


Coerce 
Him  by 


Suggesting  Collection  . 

Scheme  for  His  Trade 
Personal  Talk 
Extending  Payments 
Accepting  His  Note 
Taking  Rate  Payments 

Warning  Him 
Threatening  Him  ^ 

Using  Collection  Agency 
CalUng  in  Lawyer 
Bringing  Him  to  Court 


CHART  I:    The  debtor's  reply  to  a  letter  denotes  the  kind  of  talk  neces- 
sary to  bring  in  the  balance  due.     Begin  with  "good  pay'  arguments  and 
proceed  through  the  chart  until  the  attitude  of  delinquent  is  determined 


■  II 


liia 


CHAPTER  I 
How  to  Rouse  the  Will  to  Pay 

McGRAW,  a  newspaper  man  who  had  worked  his 
way  up  from  typesetter  to  business  manager, 
took  a  position  as  collection  correspondent  in  a  whole- 
sale paper  house.  "Your  experience  in  writing  and  in 
dealing  with  paper  buyers  must  have  fitted  you  for 
this  work,"  said  his  employer.  Results,  however,  did 
not  justify  the  conclusion;  sluggish  collections  did  not 
pick  up. 

When  the  situation  was  analyzed,  one  peculiar  cir- 
cumstance stood  out  in  relief:  remarkable  returns  from 
delinquent  printers  were  counterbalanced  by  uniform 
failure  to  collect  from  mercantile  concerns. 

The  "hard-luck"  stories  McGraw  received  from  print- 
ers had  recalled  problems  in  his  own  newspaper  ex- 
perience. The  memory  of  his  emotions  in  similar  situa- 
tions influenced  him  when  he  answered.  Evidently  it 
was  his  sympathy  and  understanding  of  their  problem 
that  gave  his  letters  a  personal  pull  irresistible  to  har- 
assed printers;  unconsciously  he  classified  and  individ- 
ualized them.  But  with  other  customers  he  had  a  hit- 
or-miss  style  which  missed  oftener  than  it  struck  home. 

Like  man^  other  correspondents,  McGraw  discovered 


8  PERSONALITY  LETTERS 

that  eolleetion  letters,  to  produce  results,  must  have  a 
vital,  man-to-man  appeal.  Carelessly  compiled  form  let- 
ters, followed  by  perfunctory  personal  appeals,  sight 
drafts,  collection  agency  work  and  hot-headed  appeals  to 
the  law  will  not  bring  in  the  money.  The  modern  col- 
lection man  must  be  an  originator,  a  man  of  intuition 
and  of  discernment;  he  must  understand  and  touch  the 
various  human  motives  which  actuate  a  debtor. 

Shaping  his  course  to  the  new  idea,  McGraw  and  his 
employer  fixed  upon  a  policy  in  regard  to  credits,  a 
plan  of  payment  and  other  details  of  collection  method. 
They  then  devised  methods  of  applying  automatic  rou- 
tine to  the  numberless  details  which  clogged  the  gears 
of  the  collection  machine.  Records  were  prepared  which 
gave  the  correspondents  an  idea  of  delinquents'  habits 
and  characteristics,  and  became  more  valuable  year  by 
year.  The  schemes  for  collection  which  suggested  them- 
selves from  time  to  time  were  not  accepted  on  their 
face  value  as  before,  but  were  tested  on  selected  lists 
of  delinquents. 

Results  so  secured  served  as  sign  posts  to  the  whole- 
saler and  pointed  the  way  to  greater  efficiency. 

How   to   Classify   Delinquent   Dealers  —  the   First 
Move  in  Bringing  in  Overdue  Accounts 

Deciding  upon  the  kind  of  debtor  with  whom  you 
have  to  deal  is  a  trick  which  appears  difficult  at  first 
glance,  but,  when  you  get  the  knack,  is  comparatively 
simple.  Collection  correspondents  group  debtoi's  into 
three  great  divisions :  good  pay,  slow  pay,  and  had  poAj. 
Every  business,  no  matter  how  small  or  how  large,  can 
get  information  that  pigeonholes  most  debtors  in  their 
proper  class. 


ROUSING  THE  WILL  TO  PAY  9 

The  retail  store  man,  for  example,  has  his  personal 
knowledge  of  his  customers.  That  failing,  clerks  from 
various  neighborhoods  or  mutual  friends  can  throw 
light  on  the  character  of  delinquents. 

If  you  have  a  multitude  of  accounts  to  handle,  get 
the  needed  intimacy  by  a  study  of  the  personality  be- 
trayed in  the  debtor's  correspondence.  Look  over  the 
letter  twice  before  attempting  to  picture  your  debtor 
to  yourself.  The  first  reading  brings  out  facts.  The 
second  develops  an  impression  of  the  man.  See  if  your 
debtor  is  trying  to  evade  your  question ;  whether  his 
excuses  ring  true  or  false.  See  if  he  is  craftily  playing 
you  for  more  time.  Is  he  ignorant,  obstinate,  careless, 
dull  ?  These  are  some  of  the  facts  to  be  sought  between 
the  lines  of  a  letter. 

When  a  successful  correspondent  encounters  an  ob- 
durate debtor,  he  puts  off  the  writing  of  his  letter  until 
he  has  made  a  regular  round  in  search  of  data.  He 
examines  the  credit  man's  records,  finds  what  people  of 
the  house  know  of  the  prospect's  business  policies,  com- 
petitors and  methods  of  holding  trade.  Traveling  sales- 
men are  called  upon  occasionally  to  help  with  the  per- 
sonal  peculiarities  of  a  delinquent. 

But  if  you  find  your  sources  of  information  limited, 
make  the  collection  letter  clear  the  ivay.  Avoid  the 
common  mistake  of  showing  irritation  in  your  first  let- 
ter to  a  debtor.  Begin  in  a  friendly,  genial  manner, 
and  malie  the  delinquent  classify  himself  by  his  answer. 
Then  take  the  proper  steps  to  make  him  pay  up  in  quick 
time.  One  or  two  form  letters  filled  in  and  mailed  by 
inexpensive  assistants  will  dispel  the  doubts  existing 
about  a  debtor  and  put  a  definite  problem  up  to  you.  Your 
task  then  narrows  down  to  that  of  selecting  and  present- 


10 


PERSONALITY  LETTERS 


No  regrets 
necessary. 
Too  much 


"We"  again 
predomin- 
ates.   Weak. 
No  argu- 
ments. 


Trite. 


Practically 
an  invitation 
to  delay. 


Lacks  "do  it 
now"  ele- 
ment. 


Dear  Sir: 

We  regret  to  be  compelled  to  again  call 
your  attention  to  overdue  payments  en 
your  account.  You  agreed  to  make  us  a 
remittance  regularly  each  month  and  we 
have,  naturally,  planned  on  receiving 
the  payments  in  this  manner. 

This  notice  is  sent  where  a  list  of  cus- 
tomers is  small  and  where  it  does  not  pay 
to  send  a  collector  or  where  you  have 
moved  from  the  place  where  the  goods  were 
leased  and  taken  them  with  you.   It  is 
our  impression  that  you  do  not  realize 
that  by  doing  this  you  forfeit  all  claim 
to  them  by  violating  the  terms  of  the 
lease. 

"Honesty  is  the  best  policy,"  and,  there- 
fore, an  immediate  settlement  will  save 
all  future  trouble,  annoyance  and  ex- 
pense for  all  parties  interested. 

We  shall  continue  to  remind  you  of  your 
duty  in  this  matter  from  time  to  time  un- 
til the  account  is  settled  or  until  you 
compel  us  to  resort  to  harsher  methods. 
We  do  not  intend  to  be  offensive  or  im- 
polite, all  we  want  is  the  money  you 
owe  us. 

Trusting  that  you  will  give  this  matter 
your  prompt  attention  and  awaiting  the 
remittance  requested,  we  are. 

Respectfully  yours. 


Letter  written  by  a  New  England  furniture  dealer  as  second 
of  a  series  of  collection  letters.  The  "we"  element  prevails 
throughout.  Instead  of  showing  the  delinquent  why  he  must 
pay  or  making  it  to  his  advantage  to  do  so,  the  letter  bristles 
with  weak  reasons  as  to  why  the  writer  needs  the  money.  The 
collection  methods  of  the  writer  and  the  system  in  use  are  of  no  par- 
ticular interest  to  the  customer.  The  writer's  "impression"  that 
the  customer  may  lose  title  to  goods  raises  doubt  instead  of  con- 
viction in  the  debtor's  mind.  The  fourth  paragraph  is,  practically, 
an  invitation  to  continue  to  delay.  "Trusting"  instead  of 
"insisting"  in  the  clincher  paragraph  is  the  final  touch  of  absurdity. 


ROUSING  THE  WILL  TO  PAY 


11 


Straightfor- 
ward appeal 
for  a  square 
deal. 

Specific, 

tactful, 

warning, 

tolerant, 

without 

weakness. 


We'll  help 
you  attitude 


We  dislike  to  belleTe  that  our  two  preT- 
iou3  letters  relative  to  the  amount  due 
on  your  contract  have  teen  ignored  by  you 
either  through  a  lack  of  courtesy  or  to 
evade  the  payment  of  a  Just  debt. 

We  certainly  feel  that  we  had  a  right  to 
expect  at  least  an  acknowledgment  of  our 
letters,  but  we  are  still  desirous  of 
extending  every  possible  courtesy  to  you 
consistent  with  good  business  policy. 
Bear  in  m-'iic"  +hat  the  piano  is  our  prop- 
erty until  fully  paid  for.  When  you  vio- 
late your  contract  you  forfeit  all  rights 
to  payments  made.  But  in  view  of  our 
friendly  rela  ions,  we  shall  defer  any 
further  action  in  the  matter  for  a  few 
days  in  order  to  permit  you  to  arrange 
for  making  the  payment. 

If  there  is  any  valid  reason  why  you  are 
unable  to  meet  this  obligation  at  the 
present  time,  you  should  arrange  to  come 
to  our  office  Immediately  that  we  may 
talk  the  matter  over  together. 


let  U3  hear  from  you,  therefore,  within 
the  next  day  or  so,  either  by  a  personal 
call  or  letter. 

Confidently  awaiting  a  remittance  by  re- 
turn mail ,  we  are 


Yours  truly. 


In  re-writing  the  furniture  company's  letter,  the  correspond- 
ent took  a  more  hiunane  view  of  the  debtor  and  wrote  in  a  frank 
friendly  tone  certain  to  rouse  good  feeling  in  the  heart  of  the 
debtor.  (In  earlier  letters  an  opening  of  this  sort  was  followed 
by  selling  talk  such  as  excerpts  from  testimonials  by  other  pur- 
chasers.) In  the  second  paragraph  the  writer,  instead  of  hurling 
platitudes  at  the  debtor,  appealed  to  his  sense  of  fair  play  and 
shame.  Then,  without  weakening  his  demand  for  payment,  he 
showed  that  he  was  willing  to  be  fair,  emphasizing  his  attitude 
with  a  hint  of  the  power  that  he  held  over  the  debtor.  In  closing, 
the  writer,  instead  of  tossing  a  hackneyed  maxim  at  the  reader, 
implied  his  real  belief  in  the  debtor's  honesty  by  "confidently 
awaiting"  a  remittance. 


12  PERSONALITY  LETTERS 

ing  the  kind  of  talk  which  fits  the  case. 

Straightforward  talk,  teeming  with  human  interest, 
is  the  magnet  which  draws  the  dollars  from  the  debt- 
or's pockets.  When  you  have  classified  your  debtor,  get 
on  his  side  of  the  fence  and  see  the  situation  through 
his  eyes.  Make  him  feel  from  your  first  word  that  j^our 
interests  and  his  are  mutual.  The  correspondent  who 
learned  that  a  customer's  home  has  been  destroyed  by 
fire  and  offered  an  extension  of  time  on  an  overdue  ac- 
count showed  a  lively  appreciation  of  his  delinquent's 
troubles  and  established  cordial  relations  which  settled 
a  recurring  business  worry. 

Playing  Upon  the  Debtor's  Personality — the  Key- 
note of  Every  Successful  Collection  Letter 

Get  the  "  I '11-help-you "  attitude  in  your  letter.  You 
will  draw  big  dividends  on  that  small  investment.  Let 
your  debtor  realize  that  your  desires  are  his  desires  in 
a  similar  situation  and  state  your  case  frankly  in  terms 
of  a  square  deal.  There  need  be  no  lack  of  dignity  or 
firmness.  You  need  no  note  of  apology  or  humility. 
To  give  your  letters  life,  get  in  intimate  touch  with  your 
prospect. 

An  analysis  of  proved  collection  letters  shows  this 
"you"  interest  appearing  in  dozens  of  ways,  limited 
only  by  the  skill  and  experience  of  the  collection  cor- 
respondent. Wherever  the  motive  appears  and  how- 
ever it  is  applied,  it  can  be  placed  under  one  of  five 
great  divisions:  pride,  utility,  caution,  money,  and  self- 
indulgence.  All  these  are  common  to  humanity,  and  all 
human  endeavor  can  be  traced  to  them  as  causes.  Study 
them  and  select  the  form  in  which  you  can  best  apply 
them  to  the  cases  which  worry  you. 


ROUSING  THE  WILL  TO  PAY  13 

If  your  records  show  the  delinquent  to  be  a  man  of 
prominence  in  his  community,  to  bear  down  on  the  pride 
motive  will  get  returns.  Dwell  on  the  humiliation  and 
embarrassment  which  attend  a  suit  for  debt.  Awaken 
bis  moral  sense  to  the  necessity  of  paying.  An  appeal 
to  his  sense  of  honor  and  fair  play  gets  results.  By 
showing  your  high  esteem  of  the  debtor's  character  and 
ability,  you  convince  him  that  payment  is  his  only  way 
of  keeping  himself  on  the  pedestal  where  you  have 
placed  him.  Caution  the  cunning  man  who  seeks  to 
take  advantage  of  your  liberal  business  policies.  Show 
him  that  his  action  is  losing  him  more  than  the  amount 
of  his  bill.  Proof  that  you  are  in  touch  with  his  other 
creditors  will  do  the  trick. 

Utility  touches  all  of  your  debtor's  solid  interests  in 
life — the  conveniences,  necessities  and  uses  which  credit, 
good  reputation  and  freedom  from  collection  embarrass- 
ment supply. 

Remind  the  dealer,  the  consumer,  the  man  who  owes 
for  trade  or  professional  service,  that  inconvenience — 
loss  of  reputation — perhaps  want — trails  at  the  heels  of 
non-payment,  and  you  have  made  a  strong  case  for  your 
house. 

How  to  Shotv  the  Debtor  that  Prompt  Payment  Is 
to  His  Advantage 

When  the  owner  of  a  general  store  wrote  his  slow  pay 
customers  that  a  prompt  payment  of  their  bills  would 
enable  him  to  take  advantage  of  a  break  in  the  market 
and  buy  at  a  heavy  discount,  his  customers  saw  the 
money  appeal  in  the  reduced  values  which  the  dealer 
promised  to  share.    He  said: 

"This  letter  will  show  you  how  you  can  save  tig 


14 


PERSONALITY  LETTERS 


money  on  goods  you  buy  of  me.  Hereafter  you  ivill 
share  in  the  profits  on  such  purchases.  This  is  my  profit- 
sharing  plan.'* 


Debtor's  Past 
-|  Correspondence 
Suggests 


Credit 

Information 

and  Its 

Sources 


Your  Sales 
Records  Indicate  I 


p        Debtor's  Business  Capacity 


Past  Credits  with  You 


-        Sales  Value  a£  a  Customer 


Debtor's  Education 


Characteristics 


Business  Background 


Mutual  Friends 
Know 


Debtor's  Popularity 


Social  Standing 


Public  l*osition 


Your  Salesmen 
Can  Describe 


r-        Debtor's  Business  Ability 


Attitude  to  Your  House 


Personality 


Agency  Reports 
Show 


Debtor's  Rating 


Business  Record  in  Full 


-  Standing  with  Vour  Competitors 


Personal 
H        Interviews 
Develop 


Impression  of  Debtor 


Business  Affair& 


Intentions  andAmbitions 


CHART  II:    Get  a  line  on  your  man.    Every  correspondent  has  within  reach  a  mass 
of  formal  and  informal  information  about  customers.     Consulting  these  sources  will  de- 
termine collection  methods  and  suggest  arguments  to  fit  every  case. 

He  followed  this  attention-getting  paragraph  by  a 
heart-to-heart  talk,  showing  that  prompt  collections  en- 
abled him  to  buy  and  sell  cheap,  and  that  prompt  pay- 


ROUSING  THE  WILL  TO  PAY  15 

ment  meant  profit  sharing.  Other  creditors  apply  the 
money  appeal  by  offering  premiums  and  discounts,  or 
by  pointing  out  the  debtor's  chance  of  losses. 

Every  debtor's  account  shows  some  twist,  some  turn, 
which  by  merely  casual  inspection  will  suggest  a  scheme 
of  collection.  The  reader  of  a  collection  letter  is  torn 
by  conflicting  emotions.  His  instinctive  prompting  to 
pay  is  followed  by  the  impulse  to  delay.  Appeal  then  to 
the  feeling  and  not  to  the  intellect. 

Force  and  threats  of  force,  except  in  extreme  cases, 
lead  to  nothing.  Write  from  the  salesman's  point  of 
view — for  there  is  salesmanship  in  the  right  kind  of 
collection  letter.  In  one  case  you  sell  goods,  in  the  other 
you  sell  satisfaction.  In  both  cases  you  play  upon  iden- 
tical human  instincts. 

Logic,  tact  and  diplomacy,  clever  wording  and  deft 
argument  in  a  letter  are  appropriate  to  progressive  busi- 
ness methods  and  will  arouse  a  friendly  willingness 
to  pay. 


Keep  Your  Trade  Alive 

GOOD  collectors  put  salesmanship 
into  their  letters  and  think  not 
only  of  keeping  bad  accounts  from  ris- 
ing above  the  established  allowance, 
but  also  of  increasing  the  volume  of 
business  their  house  is  doing.  They 
look  to  the  future  as  well  as  to  the  past. 


CHAPTER  II 
How  to  Write  a  Collection  Letter 


HUNDREDS  of  arguments  can  be  made  in  hundreds 
of  ways  to  a  debtor  of  any  class.  When  you  have 
classified  your  man,  therefore,  think — deliberate.  Don't 
dictate  the  first  idea  that  pops  into  your  mind. 

The  "you"  appeal  does  not  require  a  page  riddled 
with  the  personal  pronoun.  Get  a  mental  picture  of 
your  prospect.  Try  to  forecast  the  mood  in  which  he 
will  receive  your  letter  and  write  in  a  way  that  meets 
that  mood,  for  the  best  collection  letter  is  a  mirror  to 
your  reader.  He  looks  at  it  and  sees  himself.  To  be 
effective,  make  your  letter  play  upon  traits  common  to 
mankind,  but  which  your  reader  thinks  peculiar  to  him- 
self. 

In  a  specially  dictated  letter,  you  can  get  in  contact 
with  your  customers  by  touching  upon  personality.  In 
your  form  letters,  build  your  argmnents  upon  oddities 
of  mind  and  temperament  which  the  individual  can  ap- 
ply to  himself.  But  even  after  you  have  pictured  your 
man  at  his  desk  and  selected  the  motive  to  move  him, 
your  task  is  only  half  done.  Make  your  letters  remove, 
as  far  as  possible,  the  disturbing  influences  which  sur- 
round every  busy  man.     Then,  in  composing,  aim  for 

16 


WRITING  THE  LETTER  17 


the  four  points  which  make  up  a  good  collection  letter. 
Get  attention,  hold  interest,  present  arguments  and 
inspire  action. 


Give  Your  Letter  ike  Direct  "Drive"  of  a  Powerful 
Selling  Talk 

Keep  your  man's  education  and  business  experience 
in  mind.  Write  as  nearly  as  you  can  the  kind  of  letter 
he  would  send  you  in  similar  circumstances.  When  you 
dictate,  keep  your  man's  classification  in  mind,  or  if  he 
has  written  you,  take  another  look  at  his  letter  and 
make  it  picture  the  type  of  man  with  whom  you  deal. 
Use  language  that  your  prospect  will  understand.  The 
untaught  country  man  is  irritated  by  the  crisp  business 
tone  of  a  letter  which  sounds  "pat"  to  the  busy  city 
man.  On  the  other  hand,  the  rural  reader  will  leisurely 
assimilate  a  wordy  appeal  which  the  hurried  townsman 
dismisses  in  contempt. 

No  matter  whom  you  address,  strive  for  simplicity. 
Be  direct,  straightforward  and  clear  in  composing,  for 
the  reader  has  at  each  point  but  a  limited  amount  of 
mental  power  available.  To  interpret  your  word- 
symbols  requires  part  of  the  reader's  power;  to  get  the 
thought  suggested  by  them  requires  a  further  part;  and 
only  what  mental  power  remains  can  be  used  for  the 
decision  you  want.  Hence,  the  more  time  and  attention 
it  takes  to  receive  and  understand  each  sentence,  the 
less  time  your  debtor  can  give  to  your  idea — the  less 
vividly  will  that  idea  be  conceived. 

Adopt  a  habit  of  using  short  words  and  short  sen- 
tences. State  your  points  so  that  the  man  need  not  go 
backward  and  forward  to  connect  them.  Ideas  should 
be  understood  as  they  appear.      Be  brief.       Find  the 


18 


PERSONALITY  LETTERS 


contrast,  the  likeness,  the  thought-flash  and  word  short- 
cut to  your  points. 

A  New  York  credit  man  found  the  idea  for  a  suc- 
cessful collection  series  by  watching  passengers  in  a 
suburban  railroad  station.  The  commuters,  attracted 
by  the  piles  of  magazines,  idly  thumbed  the  pages. 
Some  passed  on;  others  remained  to  read.     "When  they 


Rousing  Debtor's 
Caution  throtJgh 


Make  Your  Letter 
Personal  by 


Touching  Debtor's   _    L 
Pride  through 


Sense  of  Honor 


Sense  of  Fair  Play 


Fear  of  Lost  Credit  Standing 


Fear  of  Notoriety 


Showing  Advantage 
of  Payment  throogh 


Chance  of  Gain 


Chance  of  Loss 


Demonstrating  the 
Utility  of 


Better  Credit 


Better  Terms 


Suggesting 

Self-induigence 

through 


p  Appeal  to  Vanity 


*-       Appeal  to  Love  of  Ease 


CHART  III:    Upon  the  proper  application  of  the  "you"  interest  depends  the  value  of 
a  collection  talk.    An  analysis  of  the  chief  characteristics  played  upon  by  credit  corre- 
spondents in  many  letters  shows  in  the  chart 


heard  the  rattle  of  the  approaching  train,  they  groped 
for  a  coin,  tossed  it  on  the  counter  and  joined  the  rush 
for  seats. 

"Their  attention  was  attracted.  The  timely  interest 
of  the  article  said,  *  Buy  me. '  The  approach  of  the  train 
compelled  decision,"  mused  the  credit  man,  as  he  re- 
view the  incident  at  his  desk  the  next  morning. 

Adopting  the  idea,  he  broke  away  from  the  stereo- 
typed openings  which  had  hampered  his  former  let- 
ters.   He  first  tried  his  new  scheme  on  the  safe  but  care- 


WRITING  THE  LETTER 


19 


LETTERHEAD 


Date 


Name  and  Address 
of  Debtor 


Dear  Sir:- 


Compel  Attention 
By  a  startling  statement,  or 
By  awakening  curiosity,  or 
By  advancing  a  new  proposition 


Arouse  Interest  by  an  Approach  Which 
Is  timely,  or 
Is  intimate,  or 
Has  new  value 


Argue  for  Payment  because  of  the  Debtor's 
Profit  as  Regards 
Money 
Utility 
Caution 
Pride 
Self-indulgence 


Impel  to  Prompt  Action  by 
Making  remittance  easy 

Concise  suiomary  of  advantages  payment  will  bring  debtor 
Rousing  debtor's  instinct  to  act  without  reflection 
Advancing  a  further  advantage  or  condition  that  hingea 
on  immediate  payment 


Yours  very  truly, 


Sigttature 


Good  or  bad  "make  up"  in  the  collection  letter  has  much  to  do  with  its  effectiveness. 
A  neat  note  will  get  action  when  the  careless  letter  fails.  Best  usage  limits  the  collec- 
tion note  to  four  paragraphs.  The  first  hooks  attention  by  means  indicated  in  the 
chart.  The  second  paragraph  lays  the  ground  for  argument  by  interesting  the  reader. 
The  third  paragraph  presents  reasons  for  paying,  while  the  fourth  realizes  on  the  good 
intentions  called  up  by  vitalizing  them  into  action 


20  PERSONALITY  LETTERS 

less  delinquents,  and  opened  the  letter  with  the  ques- 
tion: 

"Will  you  be  good  enough  to  let  me  know  if  the 
enclosed  statement  is  correct?" 

"That  will  get  attention,"  he  thought,  "for  even  the 
man  who  won't  pay  his  bills  doesn't  care  to  be  dunned 
for  more  than  he  owes." 

Realizing  that  the  reader  would  be  liable  to  throw 
the  letter  aside  on  recognizing  it  as  a  dun,  the  collector 
reassured  him  in  the  next  paragraph  by  saying : 

"Please  do  not  consider  thi^  note  in  any  way  a  de- 
mand for  direct  payment." 

The  delinquent  was  then  adroitly  led  into  an  argu- 
ment which  explained  that  the  books  of  the  company 
were  to  be  audited  and  that  prompt  payment  would 
establish  credit.  The  letter  concluded  with  this  sug- 
gestive sentence: 

"Checks  should  he  mailed  as  heretofore  to  the  store 
from  which  goods  have  been  purcha-sed." 

In  this  letter,  attention,  interest,  argument  and  clincher 
followed  each  other  in  logical  sequence,  and  through 
their  clean-cut  appeal  brought  in  the  money. 

A  scheme  for  getting  attention,  such  as  used  by  the 
New  York  man,  must  lead  every  letter.  The  average 
reader  picks  up  a  collection  letter  as  one  of  a  dozen. 
He  is  hurried.  His  head  seethes  with  business  problems 
important  to  him.  You  have  to  make  your  business  as 
important  as  his  own.  The  salesman  who  fails  to  get 
attention  with  an  opening  sentence  can  make  a  quick 
change  of  front.  The  letter  writer  has  to  take  com- 
mand in  the  first  sentence  and  batter  down  a  wall  of 
opposition  in  quick,  sure  strokes.  Any  one  of  men's 
five  classes  of  motives  may  be  used. 


WRITING   THE  LETTER 


21 


A  Denver  collector  depends  upon  curiosity  to  get 
attention  and  lead  into  interest.  He  opens  his  first  let- 
ter with  the  remark: 


How  to 

Apply  the 

'You"Interest 


Try 
Utility  on 


Ambitious  Man 


Married  Man 


i. 


Successful  Man 


Stmggfing  Man 


Suggest 
Caution  to 


Cunning  Type 


Slow  Ptodder 


Mao  Staoding  Still 


UoscrupDlous  Man         I 


Show  Money 
Value  to 


Man  With  Scant  Capital 


Close  Buyer 


Tight  Fisted 


Bargain  Hunter 


DvreUoo 
Pride  to  Alan 


Witfi  Social  Position 


Of  CiTJc  Affairs 


-|    With  Eacpenaive  Children  | 


*-  Wkb  Good  Record 


ToHch 

-  Self-ifuSalgeDce 
of  Man  Who 


A 


Lives  Well 


Has  Other  Interests 


Has  ExpensiveTastes 


CHART  ly.     When  in   doubt  about  the  motive  on  which  to  thread  the  arguments  in 

your  collection  letter,  get  a  line  on  the  character  and  circumstances  of  your  man  and 

follow  out  the  appeal  indicated 

'^Wc  irere  talking  about  you  in  the  office  this  morn- 
ing." 

The  record  of  results  from  the  letter  showed  that 
many  readers  had  their  attention  fixed  by  the  phrase. 


22  PERSONALITY  LETTERS 

They  read  on  to  find  out  what  was  said  and  turned 
their  thoughts  to  the  overdue  account.  The  argument 
which  followed  secured  payment. 

With  attention  won,  your  next  step  is  more  difficult. 
You  have  to  secure  interest  and  make  your  man  get  well 
into  your  letter  before  he  realizes  he  is  being  dunned. 
The  schemes  which  you  use  to  compel  attention  can  be 
used  to  hold  interest,  or  you  can  compare  the  advan- 
tage of  paying  with  the  disadvantage  of  not  paying. 
Play  up  your  customer's  interests  at  this  point  and  sub- 
merge yours. 

A  Cleveland  shoe  dealer  achieved  interest  by  tempting 
his  reader's  curiosity.  He  led  the  second  paragraph 
with  the  statement: 

"This  frank  explanation  is  due  you.'* 

The  line  had  a  seductive  ring  that  made  the  debtor 
read  on. 

A  wholesale  correspondent  gets  the  same  effect  by 
hurling  questions  which  every  man  would  like  to  have 
answered . 

"WJiat  makes  every  merchant  big?  What  makes  every 
hig  merchant  rich?"  is  the  way  he  begins  the  interest 
paragraph.  His  answer,  "credit,"  forms  an  argument 
for  payment. 

How  to  Make  Your  Argument  Reach  the  Climax  of 
"You"  Interest 

By  getting  the  reader's  attention,  you  turned  his 
thoughts  from  other  matters.  When  you  roused  his  in- 
terest, you  led  his  thoughts  to  mutual  affairs.  Now 
spring  the  trap.  With  swift  flowing  sentences,  brisk, 
brief,  to  the  point,  make  your  argument.  Always  pre- 
sent your  case  from  your  reader's  point  of  view,  avoid- 


WRITING  THE  LETTER  23 

ing  as  far  as  possible  the  question  of  benefits  accruing 
to  you  and  emphasizing  advantages  to  the  debtor.  Select 
the  motive — profit,  pride,  safety — most  suitable  for  the 
prospect.  You  have,  you  remember,  five  classes  of  ap- 
peals to  choose  from — caution,  utility,  pride,  money  and 
self-indulgence.  The  classification  you  have  made  of 
your  debtor  indicates  the  proper  motive.  Your  knowl- 
edge of  him,  gained  through  letters,  business  dealings, 
salesmen,  friends  and  other  sources,  indicates  the  way 
it  may  be  applied. 

Caution,  for  instance,  is  always  a  timely  appeal. 
Here  is  one  of  the  hundreds  of  ways  in  which  it  has 
successfully  been  applied: 

*'W.e  wish  to  call  your  attentiwi  to  your  contract, 
which  is  draimi  according  to  the  laws  of  the  state.  And 
you  unll  understand,  we  can  not  only  re-take  our  mer- 
chandise, hut  may  retain  as  liquidated  damages  all  pay- 
ments you  have  made,  and,  in  addition,  secure  judg- 
ment for  any  depreciation  in  the  value  of  this  merclian- 
dise  while  in  your  possession.'* 

In  six  lines,  the  reader  is  cautioned  as  many  times. 
Among  the  distinct  thoughts  advanced  are  fear  of  the 
law,  loss  of  goods,  money  damages  and  expense  of  suit. 
In  a  similar  way  and  with  as  many  variations,  utility 
may  be  run  into  the  argument.  Or  if  utility  or  cau- 
tion seems  inapt,  the  remaining  motives  may  be  applied. 

Pride  is  the  easiest  motive  of  all  to  touch,  for  it  is 
hard  to  find  a  man  who  doesn't  care  to  stand  well  in 
the  esteem  of  his  neighbors  and  friends.  Consequently 
strong  collection  letters  carry  the  pride  appeal  well  em- 
phasized. One  effective  paragraph  of  the  sort  which  has 
been  used  with  great  success  by  a  Boston  instalment 
man  reads  as  follows : 


24  PERSONALITY  LETTERS 

''Have  you  not  sufficient  personal  pride  to  protect 
your  reputation  for  integrity?  Would  you  care  to  have 
your  neighbors  and  your  friends  know  that  you  have 
tried  to  obtain  part  of  the  furnishings  of  your  home 
without  paying  for  themf  And  would  you  care  to  have 
nn  officer  of  the  law  replevin  these  furnishings  from 
your  hom£?  I  will  ask  you  to  stop  and  consider  the 
notoriety  and  embarrassment  which  you  would  be  forced 
to  undergo  should  ymi  be  made  the  defendant  in  a  suit 
for  unpaid  debt  and  have  these  detoMs  become  public." 

Here  is  a  picture  vivid  enough  to  budge  any  man 
over  the  border  of  indecision.  Pierce  a  man's  pride  and 
you  have  a  compelling  arsrument.  Make  him  act  because 
of  love  for  family,  through  business  or  social  standing, 
or  through  the  reputation  for  fairness  and  square  deal- 
ing which  he  would  maintain.  In  a  similar  way,  pic- 
ture the  ease  and  freedom  from  worry  of  the  man  who 
pays  his  bills  and  place  it  before  one  who  is  inclined 
to  be  self-indulgent.  But  whatever  appeal  you  make, 
be  sure  that  you  have  a  knock-out  punch  at  the  end  of 
the  letter. 

Getti7ig  the  Check  Signed  at  Long  Range — The  Let- 
ter that  Brings  Acti/)n 

Too  often  a  letter  which  gets  attention,  holds  interest 
and  contains  strong  argument  loses  its  force  in  the  final 
lines,  because  it  lacks  a  "do-it-now"  element.  The 
writer  "hopes  to  receive  an  early  reply,"  or  "trusts 
that  the  matter  will  receive  prompt  attention."  The 
reader,  already  moved  to  payment,  turns  from  his  pur- 
pose at  any  such  confession  of  weakness. 

Make  it  easy  for  the  debtor  to  follow  the  chain  of 
thought  you  have  started.     Enclose  an  envelope  or  a 


WRITING  THE  LETTER  25 

coin  card,  or  if  you  know  his  bank,  enclose  a  checK 
which  only  needs  his  signature.  Ask  him,  if  the  bill  ia 
small,  to  pin  currency  to  the  letter  at  your  risk.  The 
line,  ^^ Don't  bother  with  money  order  or  draft;  simply 
send  us  your  check,"  often  is  sufficient.  Finally,  in- 
stead of  "hoping"  or  "trusting",  end  with  a  sentence 
which  expresses  your  confidence  in  getting  prompt  pay- 
ment. One  man  says,  "Thank  you  for  prompt  pay- 
ment," Another  closes  with,  "Will  you  kindly  see  that 
this  matter  gets  the  attention  it  deserves?"  There  are 
dozens  of  other  ways  of  closing  your  letter  with  a  crash, 
but  in  every  case  select  the  method  which  best  fits  the 
reader  and  prompts  him  to  immediate,  unreflective 
actioQ. 


Collections  Win  Business 

CUSTOMERS  who  keep  their  ac- 
counts paid  up  feel  a  certain  sat- 
isfaction in  deahng  at  that  store.  They 
are  privileged  persons — always  wel- 
come. 

If  they  lag,  there  is  an  irresistible 
temptation  to  cross  to  the  other  side 
of  the  street,  so  it  is  not  always  so 
much  a  matter  of  getting  the  money 
as  of  keeping  the  customer's  conscience 
clear  that  prompts  a  credit  man  to 
keep  the  buyers  up  to  date  on  their 
bills. 


CHAPTER  III 


Persuading  Dealers  to  Pay  up 

ANYTHING  from  Brown  this  morning?"  inquired 
the  sales  manager  for  a  middle  western  shoe 
factory. 

"Nothing  yet,"  said  the  collection  manager.  Week 
after  week  he  heard  the  same  question — had  to  give  the 
same  answer.  He  tried  various  novel  collection  ideas. 
Brown,  the  shrewd  shoe  dealer  in  a  little  Ohio  town, 
remained  unmoved,  counting  on  the  fact  that  he  was 
rated  "slow,  but  good." 

Finally  the  credit  manager  hit  upon  a  new  twist  for 
the  old  sight  draft  procedure.  First  he  wrote  Brown  a 
"selling"  letter,  pointing  out  the  trade  advantages  in 
price,  in  quick  service,  in  good  quality  and  in  easy 
transportation  which  his  factory  represented  to  Brown 
— and  might  represent  to  Brown's  competitor  across  the 
street.  He  pointed  out  the  prestige  and  accumulated 
value  which  had  accrued  to  Brown  through  his  own 
local  advertising,  linked  with  the  manufacturer's. 

''One  hig  item  in  any  dealer's  working  capital,"  ran 
the  letter,  "«s  this  advertising  and  this  prestige.  It  is 
such  a  valuable  asset  that  its  loss  often  cripples  the 
dealer  who  is  divorced  from  his  standard  lines." 

26 


DEALER  ACCOUNTS  27 

The  collection  manager's  next  note  was  curt.  It  built 
upon  the  effect  of  the  previous  letter.  It  notified 
Brown  that  a  draft  had  been  drawn  on  him  and  warned 
him  that  his  credit  would  be  cut  off  if  he  disregarded  it. 
The  former  letter  had  made  Brown  appreciate  credit  as 
never  before;  with  the  final  ultimatum  before  him,  he 
reflected  that  shattered  credit  standing  with  his  best 
source  of  supply  meant  more  than  six  per  cent  to  him. 
He  saw  his  lines  and  his  advertising  in  the  act  of  pull- 
ing customers  in  at  his  competitor's  doors.  He  realized 
that  he  stood  between  this  alternative  and  that  of  cash 
buying,  "When  he  grasped  the  importance  of  this  warn- 
ing, he  honored  the  draft. 

Brown's  correspondent  knew  that  refusal  to  pay  a 
sight  draft  no  longer  suggests  insolvency  and  that  such 
a  refusal  may  be  made  with  impunity.  He  knew  that 
to  send  a  sight  draft  in  the  routine  way  usually  delayed 
payment,  irritated  the  customer  and  led  to  open  war. 
It  was  an  empty  threat  —  how  could  he  put  force  be- 
hind it? 

Obviously,  he  could  cut  off  Brown's  credit.  Would 
that  mean  anything  to  the  slow-pay  dealer?  Would  it 
threaten  his  business  and  make  him  see  prompt  payment 
as  profitable?  Instantly  a  successful  collection  plan 
shaped  itself:  to  sell  the  dealer  }iis  need  of  credit 
standing  with  the  house;  to  warn  him  that  the  refusal 
of  the  sight  draft  might  mean  loss  of  his  credit  privi- 
lege; to  send  the  draft  on  the  day. 

From  the  city  newsboy  to  the  country  storekeef  er, 
men  who  buy  to  sell  again  can  be  made  to  realize  that 
their  credit  standing  with  their  best  supply  sources  has 
much  to  do  with  their  success.  When  they  buy  promis- 
cuously, the  collector  has  only  a  slight  hold  on  them — • 


28 


PERSONALITY  LETTERS 


credit  standing,  therefore,  must  be  awarded  such  pur- 
chasers only  after  rigid  scrutiny.  Where  service,  prices, 
shipping  facilities  and  long  continued  advertising  tie  the 
dealer  to  the  manufacturer  and  jobber,  however,  dam- 
aged credit  standing  means  that  the  whole  business 
limps. 

This  is  the  advantage  which  the  wholesale  collector 
can  play  in  urging  prompt  payment — the  disadvantage 
he  can  threaten — the  club  he  can  swing:  lost  credit 
standing  with  your  best  source  of  supply.  No  matter 
what  routine  form  of  collection  is  used — whether  the 
statement,  the  personal  note,  the  sight  draft,  the  scheme, 
the  letter  holding  up  orders,  or  the  personal  interview — 
put  into  it  some  new  twist  or  angle  that  points  a  warn- 
ing finger  to  loss  of  credit  standing.  You  can  find  your 
leverage  in  the  fact  that  the  debtor's  buying  facilities 
and  advertising  achievements  may  overnight  be  turned 
into  the  cash  drawer  of  some  competitor. 


How  to 
Watch 
Dealer 

Accounts 


Exchange  Credit  Advice 
with  Other  Wholesalers 

Outside  Help 

Use  Credit  Agencies 

Keep  Debtor  in 
Touch  by  Correspondence 

Have  Salesmen  Report  on 
Debtors 

Information  through 
Your  Concern 

Require  Branch  House 
Statements 

Send  Special  Men  on 
Important  Cases 

CHART  V:    Mail  collection  for  the  producer  and  wholesaler  hinges  on  knowledjje  of 

the  debtor.     Know  his  ability,  responsibility,  personal  characteristics,  social  position, 

business  standing  and  dependence  on  you  for  merchandise.     This  chart  shows  your 

avenues  of  information 


A  blow  at  credit  standing  touches  all  the  five  elemen- 
tal human  promptings:  pride,  caution,   utility,   money 


DEALER  ACCOUNTS  29 

and  self-indtilcence.  It  strikes  pride,  because  no  one 
wants  to  be  told  that  trust  can  no  longer  be  reposed  in 
him;  caution,  because  injured  credit  standing  spells  in- 
jured business  and  makes  every  hard  money  situation 
dangerous;  utility,  because  of  the  conveniences,  the  ad- 
vantages, the  necessities  of  profitable  business  which 
hinge  on  credit  buying;  self-indulgence,  because  a  busi- 
ness man  who  has  credit  is  not  forced  to  keep  the  tight 
rein  required  every  day  where  cash  buying  is  done;  and 
money,  because  low  credit  standing  clips  discounts,  over- 
turns buying  routine  and  inflicts  costly  transportation 
methods. 

The  expert  collector  in  the  office  of  the  factory  or  job- 
bing house  has  all  this  in  mind  when  he  writes  to  his 
debtor.  He  remembers  that  back  of  every  claim  for 
payment  stands  his  power  to  withdraw  credit.  If  his 
sales  department  has  given  service — if  it  has  made  buy- 
ers realize  that  the  house  offers  them  unusual  advan- 
tages, the  collector  can  put  this  new  note  into  all  his 
efforts  and  force  attention,  interest,  compliance. 

How  io  Make  Your  Collection  Letter  Play  on  the 
Dealer's  Fear  of  Lost  Credit  Standing 

The  wholesaler's  collection  chief  deals  with  business 
men.  Letters  to  them  may  be  plain  requests  for  busi- 
ness justice.  You  can  put  a  curtnesa  into  your  re- 
minders that  would  lose  trade  if  used  by  a  retailer  in 
dunning  his  customers.  Even  the  smallest  business  maxi 
is  familiar  with  the  forms  of  collection.  He  recognizes 
business  routine,  so  long  as  it  is  coupled  with  power, 
system  and  fairness;  he  is  equally  quick  to  recognize  the 
"bluff." 

Talk  to  your  debtor  on  paper  just  as  if  you  were  in- 


30 


PERSONALITY  LETTERS 


terviewing  him  in  his  own  office — fairly,  frankly, 
directly.  An  Omaha  credit  man  lets  this  idea  dominate 
his  whole  collection  plan.  Instead  of  a  form  letter  se- 
ries or  exclusive  use  of  personal  letters,  he  sends  one 
standard  note  which  is  little  more  than  a  polite  state- 


CoUecting  by 
Letter  from  h 
Dealers 


Remind  Debtor  That  Lom  of 
His  Credit  with  You  Mesas 


His  Uosa  of  Vou;  Advcrtuing  and 
Trade  Pfeatige 


Hia  Loss  of  Your  Service  aod 
■M«rket  Advantages 


Hi*  Competitor  Will  Carry  Your  Lines 


His  Competitor  Will  Cash  on  All 
AJvertisJQg  of  Your  Lines 


-  Threaten  Loss  of  Credit  by 


r     Proof  That  You  Know  Debtor's  Situation 


Hints  of  Credit  Withdrawal 


Mention  of  Outside  Inquiries  as  to 
His  Standing 


Warning  of  Credit  Withdrawal 


-   Insistence  on  Reduced  Order  or  a  Paynaeot 


*-    Holding  Orders  for  Remittance  on  Account 


CHART  VI :     Know  your  man — then  let  him  know  that  you  know  him.     Make  him 

realize  what  credit  standing  means  and  show  him  how  essential  settlement  is  by  writing 

your  letter  on  these  vital  themes 

ment  of  the  account  and  follows  with  a  series  of  one- 
paragraph  letters  increasing  in  urgency.  His  third  note, 
designed  to  develop  the  debtor's  attitude,  reads: 


A  business- 
like note 


Our  draft  on  you  of  October  8th  has  been 
returned  to  ua.  We  have  notified  you  twice  about 
this  account  and  have  received  no  answer.  Please 
he  prudent  about  this;  let  us  know  your  position. 
Kindly  name  us  the  date  on  which  we  may  expect  the 
amount  due,  $54.40. 


Another  executive  carries  the  business  tone  still  fur- 
ther. 

"Bills  and  statements,"  said  he,  "speak  the  every- 
day language  of  the  retailer.     Save  the  letter  for  the 


DEALER  ACCOUNTS  31 

special  cases  where  you  need  diplomacy  or  sledge- 
hammer force.  Until  notice  of  suit,  I  send  merely  four 
consecutive  statements  of  the  account,  writing  upon 
each  a  long  band  line  or  two  of  personal  comment, 
such  as: 

(1)  **Not  a  duB — merely  a  reminder." 

(2)  "Help  us  in  our  invoicing  by  getting  tliis  in  as 
soon  as  possible." 

(3)  "Shall  we  be  obliged  to  give  you  unpleasant 
notoriety  by  bringing  suit  ? ' ' 

Because  your  customers  are  in  business  themselves 
and,  therefore,  have  collection  difficulties  of  their  own, 
thej""  will  feel  the  fairness  of  your  claims  upon  them,  if 
your  letters  talk  man-to-man.  Play  upon  this  bond  of 
sympathy.  One  collection  man  combined  this  tone  with 
a  hint  of  lost  credit  standing  like  this : 


Reaching  the  You  have  a  store  of  your  own.   Isn't  it 

debtor-dealer  true  that  80«e  debtors  are  bo  peraietently  slow 

u  luer  ^^  ^^  make  you  wish  sometimes  that  you  had  never 

try  a  man-to-  taken  their  orders?  You  know  how  good  it  feels 

man  para-  when  a  man  pays  up  promptly — how  it  makes  you  feel 

ufn-nh  like  extending  him  favors.  Let  us  feel  that  way 

*^  '^  ahout  you. 


Whether  muffled  by  tactful  wording  or  not,  the  force 
of  the  personal  note,  the  statement  and  the  "fair-play" 
letter,  lies  in  the  power  to  cut  off  the  debtor's  credit 
with  a  supplier  who  represents  profit  to  him.  Some- 
times it  is  necessary  to  give  him  a  taste  of  lost  credit 
standing  in  order  to  make  him  realize  what  is  at  stake. 

Row  to  Exercise  Tact  in  HoMdling  Orders  from 
Your  Poor  Credit  Risks 

Tact  in  delaying  shipment  of  new  orders  until  payment 
is  made  on  account  often  retains  the  customer's  trade. 


32  PERSONALITY  LETTERS 

"Insufficient  credit  reports,'*  This  tactful  phrase 
pulled  a  Western  collection  correspondent  out  of  a  pre- 
dicament. Here  was  Hardy's  order  for  a  big  fall  ship- 
ment, lying  beside  a  statement  of  his  overdue  account 
for  $329.00.  Manifestly  it  would  be  impossible  to  fill 
that  order  with  Hardy  already  beyond  his  credit  limit, 
although  his  record  was  clean.  The  sales  department 
was  putting  on  pressure.  An  abrupt  refusal  of  the 
order  would  drive  off  his  trade.  How,  without  offend- 
ing the  customer,  could  a  payment  be  brought  in  such 
as  would  warrant  the  shipment?  This  letter  by  special 
delivery  answered  the  question: 


How  a  coUec-  Inoufflolent  credit  reports  compel  us  to 

tion  corre-  hold  your  order  of  the  ISth.  We  regret  that  we 

iiv I  cvrr  -  have  not  been  able  to  obtain  Juet  the  information 

sponaent  put  necessary,  for  our  inability  to  do  this  causes  us 

"you"  interest  both  annoyance.   In  order  to  make  your  delay  In 

inin  n  nn.ih'i'n-  Retting  the  goods  as  brief  as  possible,  I  am 

^T^w  aiw-sni.p-  writing  special  delivery  to  say  that  I  am  author- 

ment-ilU-pay  ized  to  have  your  order  made  up  and  to  release  It 

letter  immediately  on  receipt  of  your  check  for  $125  on 
account. 


This  problem  of  a  big  order  from  a  poor  risk  who  has 
gone  his  limit,  often  causes  friction  between  the  credit 
and  sales  departments.  The  sales  department  believes 
that  its  efforts  are  being  uselessly  discounted,  while  the 
credit  man  thinks  that  ultimate  profit  has  been  over- 
looked in  the  effort  to  establish  a  sales  record  and  feels 
justified  in  the  attitude  he  has  taken.  Handling  the  case 
requires  quick  wits,  keen  appraisement  of  the  circum- 
stances and  diplomatic  phrasing.  The  condition  of  the 
account,  together  with  quickly  available  credit  informa- 
tion, dictates  the  course  of  action  in  any  individual  case. 
Often  advice  to  the  debtor  to  reduce  his  order  for  his 
own  safety  points  the  way  out.   Here  is  a  letter  that  held 


DEALER  ACCOUNTS  33 

down  an  account,  made  the  merchant  feel  that  his  sup- 
plier had  saved  him  from  over-buying  and  rang  the  bell 
of  warning  which  pulled  payment  back  to  the  basis  of 
promptness : 


How  to  veil  Te  have  your  order  for  one  dozen  Beateyer 

a  threat  of  Cream  Separators.    This  is  double  the  usual 

J  oT  ^'4  slee  of  an  order  from  a  merchant  of  your  rating 

lost  credit  in  the  middle  western  territory.   We  are  holding 

Mtanding  and  ^^e  shipment  while  we  write  to  suggest  that  un- 

mnJce  the  loos  you  have  customers  lined  up  for  this  stoolc, 

J  ,   '  ,       you  let  us  reduce  the  first  shipment  from  twelve 
deaierfeel  to  six. 

your  'personal 

inij>rt"tf  in  Then  you  consider  that  you  have  a  oonsider- 

""r,.  *"       able  account  with  us  now,  $437.63.  we  feel  that 
buiiaing  up  tor   your  own  interest  as  well  as  ours  you  will 

his  business  hot  want  to  stretch  your  credit  by  an  unusually 

large  order.   If  you  have  places  for  twelve 
separators,  however,  and  can  arrange  to  make  us 
part  payments  of  $50  on  the  12th,  22nd  and  let, 
we  believe  that  you  can  buy  safely,  and  we  will 
be  glad  to  ship  you. 


This  letter  was  effective,  not  so  much  because  it  sug- 
gested a  reduction  of  the  order,  but  because  it  cautioned 
the  customer  that  he  was  going  beyond  safe  limits  and 
touched  his  pride  in  his  good  standing.  It  flashed  the 
possibility  of  lost  credit  as  an  impersonal  necessity 
which  lavish  buying  would  soon  bring.  It  made  him 
feel  that  he  must  pay  his  account  in  ^der  to  keep  his 
business  running  well  and  to  avert  the  sure  fate  of  a 
C.  0.  D.  rating. 

The  "you"  interest  that  brings  in  wholesale  accounts 
is  this;  prompt  payment  means  continued  credit  and 
buying  favors  for  the  debtor  from  his  most  profitable 
sources;  delinquency  means  the  loss  of  these  advantages. 
This  is  the  power  that  must  be  felt  in  your  strongest 
"suit"  letter  and  your  most  intimate  personal  request, 
whether  hinted  in  diplomatic  phrases  or  shouted  in  un- 
derscored "caps." 


'■^^ 

^M|| 

^ 

S^^ 

liVi^OiE 

CHAPTER  IV 


Collecting  Retail  Bills  by  Letter 

WHEN  Hilton  failed,  he  learned  his  collection  les- 
son. He  reviewed  the  causes  of  his  insolvency. 
At  a  critical  point  in  his  affairs  he  had  found  needed 
capital  tied  up  in  bad  accounts.  Unwise  credits?  They 
could  not  fairly  be  called  that.  Most  of  his  debtors 
were  good  for  amounts  far  greater  than  their  debts; 
loose  collection  methods  were  to  blame. 

Hilton  remembered  customers  who  had  transferred 
their  trade  without  apparent  reason ;  others  because  they 
were  offended  at  his  plain  letters;  and  some  who  had 
left  town  owing  him  money  because  his  letters  were  not 
plain  enough.  He  remembered  a  senator  who  was  furi- 
ous at  monthly  statements  and  a  society  woman  who 
bought  beyond  her  means  because  statements  were  not 
sent  promptly  enough. 

Hilton  knew  that  he  had  been  wandering  in  the  dark. 
Finally  the  ** trouble  man"  for  one  of  his  wholesale  cred- 
itors showed  him  that  his  mistake  had  been  not  to  clas- 
sify his  customers. 

Hilton  had  sent  the  same  form  letter  to  J^ohn  tlones, 
laborer,  as  to  John  Smith,  senator — and  he  should  not 
have  sent  a  form  letter  to  either  of  them.    John  Jones 

34 


RETAIL  ACCOUNTS  35 

needed  a  week-end  statement.  Quick  work  would  have 
brought  a  cheek  from  his  extravagant  woman  customer. 
A  "mere  reminder"  when  the  account  was  two  months 
old  would  have  saved  Senator  Smith's  patronage.  When 
Hilton  got  on  his  feet  again  he  classified  his  customers, 
in  order  that  he  might  keep  correct  touch  with  each 
group  and  follow  every  debtor  in  the  way  which  collec- 
tion practice  has  found  most  effective. 

Debtors  to  the  retailer,  the  public  service  company 
and  the  professional  man  need  special  groupings.  Most 
of  the  retail  merchants'  customers  are  women,  and  very 
few  of  them  have  any  technical  knowledge  of  business. 
The  retailer  has  to  handle  accounts  of  non-property 
owners  guaranteed  by  their  acquaintances,  charges  by 
irresponsible  buyers,  "skips,"  people  who  are  wealthy, 
but  slow  to  pay  and  quick  to  resent  a  dun,  salaried  cus- 
tomers, wage  earners  who  are  dependent  on  local  day 
labor,  and  professional  "dead  beats."  Nor  can  retail 
accounts  be  reduced  entirely  to  tickler  routine,  for  they 
are  the  most  intimately  personal  of  all  business  debts. 
A  local  strike  or  lockout  may  upset  an  entire  collection 
campaign — personal  work  on  many  of  the  names  is 
essential  week  by  week. 

Making  Retail  Collection  Individual.  Classifying  the 
Debtor,  then  Reaching  Him  on  Time 

Promptness  is  the  great  essential  in  dealings  with  re- 
tail debtors.  All  classes  of  retail  delinquents  are 
tempted  to  transfer  their  trade  when  their  accounts  get 
formidable.  Your  debtors  may  do  this  more  easily  than 
the  wholesaler's,  who  realize  how  much  their  business 
depends  on  their  credit  standing  with  one  or  a  few  well- 
located  suppliers;  or  instalment  buyers,  who  are  iLsually 


'36 


PERSONALITY  LETTERS 


bound  by  contracts  and  mortgages.  Educate  your  cus- 
tomers, therefore,  to  pay  promptly;  show  them  an  ad- 
vantai?e  to  themselves — ^sell  them  the  peace  of  mind, 
the  good  standing  in  their  community  or  the  credit 
extensions  they  will  enjoy  when  they  pay  their  bills  as 


Debtor 

Regular  Statements  and 

••Good  as  Cash" 

Informal  Reminders 

Monthly  Statements 

-    Salaried  Employees  - 

-    Prompt  Letter  Follow-up 

^       Hint  ol  Garnishment 

Workers 

-      Week-end  Ststements 

Wage  Earners 

-    Personal  or  Form  Lenet* 

How  to 
Collect  for  . 
the  Retail 
Store 

-      Hint  o(  Garnishment 

Minors 

Warn  That  Statement 
Win  be  Sent  Gnarantor 

Guaranteed      L 
Accounts       1 

Women 

Men  Witboot 
Property    . 

*-     Refer  Bill  to  Gnaraitor 

TooSmaUfoc 
Ordinary  FoUow-np 

-    Petty  Accounts  - 

Remindn  Srhetnm  sad*  T 

-  Scattered  Purcfaaacs  - 

Locate  througti 
Trade  Co-opefatk)0 

Transients  and 
"Sklpe" 

-     "Dead-beats"     - 

-  l,ocal  Trade  Sbitters  - 

Bring  Quickly  to  a 
Legal  Usoe 

CHART  Vll:    Your  collection  letter  is  like  a.  good  prescription.    This  chart  will  help 

you  diagnose  every  case,  so  that  you  can  make  your  letter  coataia  the  ingredients  whicn 

will  effect  a  settlement 


they  come  due.  Here  is  a  letter  whose  success  hinged 
on  hinting  that  postponed  payment  would  only  bring 
more  insistent  appeals  and  showing  a  disadvantage  in 


RETAIL  ACCOUNTS  37 

allowing  the  account  to  remain  outstanding  any  longer, 
it  gets  action. 


A  letter  that  Yes;  another  bill. 

reads  -itself .  _you  are  tired  of  getting  them.      It  coats  us 
tells  satisjac-  money  to  send  them. 

tion  and  in- 

amrpv  nrt-inn  — Let's  save  each  other  a  lot  of  trouble.      Mail 
tjnres  action  that  check  for  $6.  00  today. 

You  will  be   saved  more  bother;   we  will  be   saved 
time  and  postage. 

Thank  you. 


To  keep  your  debtors  paying  promptly,  collect 
promptly.  "Promptly"  for  a  wage  earner  or  a  busi- 
ness worker  on  a  low  salary  means  a  statement  within 
one  or  two  weeks  of  the  due  date  of  the  bill.  After  two 
such  statements  have  been  sent,  successful  credit  stores 
often  complement  the  third  statement  with  a  short  let- 
ter, which  points  out  that  the  bill  is  overdue.  The 
working  man  who  has  lost  his  job  or  who  has  had  sick- 
ness in  his  family,  must  be  dealt  with  as  carefully  as  a 
"good  as  cash"  patron.  Here  is  a  letter  that  gained  a 
permanent  customer  and  pulled  regular  payments  on  a 
bill  that  seemed  hopeless: 


An  offer  of  We  were  very  sorry  to  hear  of  your  recent 

rrfidii  p^itt.  misfortune.   We  are  not  going  to  push  the  collec- 

f^tuut^ixu  ^^^^  ^^  y^^^  ^^^^  ^^  $23.00.  for  we  realize  what 

sxomn  a  case       g^jj  accident  such  as  youra  means. 
where  it  vxmld 

have  been  ask-  ^®  "•'"^  granting  you  an  extension  of  thirty 

days  on  your  present  bill.  At  that  time  wa  would 
appreciate  a  part  payment,  and  can  arrange  some 
easy  settlement  of  the  balance.   Call  when  you 
can  and  let  us  plan  this  with  mutual  fairness. 


edfo 


Wishing  you  an  early  recovery,  we  are. 


After  the  debtor  class  whose  pay  comes  to  them  every 
two  weeks  or  oftener,  is  a  second  great  division  of  your 


38  PERSONALITY  LETTERS 

debtors;  those  who  own  property  or  are  well -employed, 
good  for  reasonable  amounts  and  need  only  monthly 
statements  and  mild  letters  to  rouse  them  to  payment. 
Selling  talk  often  strengthens  the  letter  to  such  a 
debtor ;  to  use  one  paragraph  for  advertising  attractive 
lines  softens  the  point  for  unbusinesslike  readers,  and 
makes  sales. 

A  large  group  is  made  up  of  wealthy  customers  who 
must  sometimes  be  disregarded  for  months  before  col- 
lection is  attempted. 

A  large  Chicago  retailer  collected  from  a  delinquent 
Senator  with  this  letter : 


One  carefully-  Your  account  with  us  now  amounts  to 

phrased  vara-  ^I'S-OO   We  appreciate  your  extended  patronage 

r  of  ou*"  Store.  At  this  time  we  are  trying  to  clean 

ffrapn  more  up  all  of  our  accounts  preparatory  to  a  hookkeep- 

effectual  than  ing  change,  and  we  would  thank  you  very  much  to 

showers  of  look  up  this  till.  We  do  not  wish  you  to  take 

,  ...     ■'  this  letter  as  a  dun,  but  only  as  a  reminder,  and 

tnlls  y,Q   ]£now  that  you  will  welcome  it  as  much  as  we 
will  your  check  for  $175.00. 


When  the  big  divisions  have  been  made,  and  letters 
have  been  built  that  are  aimed  at  representative  debtors, 
special  eases  come  up.  The  peculiarities  of  each  indi- 
vidual ease  will  suggest  the  way  to  apply  the  principles 
of  collection — for  instance,  don't  bother  the  man  who 
has  just  changed  positions,  and  is  trying  to  catch  up. 

Finding    the    Paying    Impulse    in   Special   Deitor 
Classes  That  Make  Trouble  for  the  Retailer 

Is  there  a  pampered  son  of  some  wealthy  family  run- 
ning a  bill  at  your  store  as  if  the  family  purse  strings 
had  been  untied  for  his  special  benefit?  Send  him  a 
brief  note  saying  that  if  he  does  not  pay  by  a  certain 
date,  the  collection  routine  will  forward  the  bill  to  his 


RETAIL  ACCOUNTS 


39 


father.    If  the  money  doesn't  come  in,  a  letter  like  this 
will  usually  bring  it : 


A  successful 
letter  to  the 
father  of  a 
spendthrift 
minor,  after  a 
warning  had 
failed 


Your  son  Charles  has  a  considerable  account 
with  us.   We  have  had  several  promises  of  payment 
from  him  hut  we  have  not  yet  received  a  check. 
This  carelessness  on  his  part  is  only  natural — he 
has  not  realized  the  position  in  which  he  places 
himself.  As  the  amount  of  his  bill  is  now  $85.00, 
I  have  thought  it  wise  to  call  your  attention  to 
his  oversight.   Will  you  not  speak  to  him  or  ad- 
vise us  as  to  what  we  should  do  in  the  matter? 


Have  you  an  extravagant  woman  customer  who  is 
arousing  your  anxiety  by  her  continued  heavy  buying 
on  credit?  The  tone  of  this  letter  has  been  found 
effective  in  hastening  payment  and  holding  the  trade : 


How  the 
sting  is  taken 
out  of  a 
reminder  to 
women  cus- 
tomers with 
flattery  and 
selling  talk 


No  doubt  you  had  overlooked  your  little  ac- 
count with  us,  for  we  note  that  you  made  a  large 
purchase  yesterday.   In  fact  you  have  gone  Quite 
beyond  our  usual  credit  limit.   We  are  glad  to 
have  your  trade  and  appreciate  serving  such  a 
discriminating  buyer.   We  feel,  however,  that  you 
would  now  prefer  to  settle  this  account  as  so  on 
as  possible;  so  we  are  writing  this,  not  as  a  re- 
quest for  payment,  but  merely  as  a  reminder  to 
you. 

Our  new  Easter  models  have  arrived  and  are 
attracting  thousands  of  ladies  to  our  millinery 
department.  You  will  find  something  there,  we 
are  sure,  which  will  delight  your  taste. 


The  same  common-sense  method  applies  to  other 
classes.  Trace  the  "skip"  by  means  of  merchants'  asso- 
ciations in  other  towns,  or  by  co-operation  with  other 
retailers.  Bring  him  to  time  with  direct  threats  of  the 
law.  Hint  to  the  salaried  slow  payer  that  you  may  be 
forced  to  garnishee. 

Classify;  subdivide  j'our  three  large  groups;  then 
study  the  paying  impulses  of  every  class. 


CHAPTER  V 
How  to  Line  up  Instalment  Accounts 

DISCOURAGED  buyers  or  "give-ups"  were  crip- 
pling the  profits  of  a  large  furniture  instalment 
house.  Goods  were  ordered  with  the  minimum  payment 
down,  kept  until  collection  efforts  were  exhausted,  and 
relinquished  with  a  "hard-up"  plea — after  three 
months'  usage. 

The  head  correspondent  traced  the  whole  trouble  to 
collection  letters  that  collected  too  well.  Though  well- 
written  and  carefully  mailed,  they  defeated  their  pur- 
pose. They  laid  stress  on  prompt  payment;  demanded, 
coaxed,  threatened.  They  set  debtors  to  thinking  only 
of  their  obligations ;  and  encouraged  return  of  goods. 

Re-selling  letters  lowered  return  losses  and  helped 
collections.  Strong  sales  paragraphs  made  the  delin- 
quent want  to  keep  his  purchase.  Purchases  by  others 
on  similar  wages  stirred  the  debtor *s  pride.  "Cash-up" 
offers  were  ruled  out,  because  experience  showed  that  a 
cash-up  reputation  made  for  delayed  instalments.  Spe- 
cial terms  in  the  way  of  smaller  instalments  or  more 
convenient  intervals  were  proposed  in  the  second  or 
third  letter  of  a  form  series,  but  with  no  reduction  in 
total  price. 

40 


INSTALMENT  ACCOUNTS 


41 


A  collection  letter  serias  planned  on  these  lines  turned 

the  tide. 

The  "skip"  who  leaves  with  unpaid  property  over- 
night is  a  case  not  so  much  for  the  instalment  collector 
as  for  the  detective  and  the  lawyer.  The  instalment 
"slow  payer"  is  little  different  from  the  "slow  payer" 
in  retail  trade.  The  "give-up,"  however,  requires  your 
best  thought;  diplomacy,  keen  selling  ability,  judgment 
in  making  terms — all  of  these  are  necessary.  The  ' '  give- 
up  "  is  within  the  law ;  he  may  or  may  not  be  dishonest. 
Don't  coax  or  threaten,  but  sell  Mm. 

Here  is  a  form  letter  that  was  successful  with  mem- 
bers of  a  kitchen  cabinet  club  who  got  so  far  behind 
that  they  seemed  prospects  for  the  truck-router: 


A  sales-and- 
coUection  letter 
ickich  forcibly 
dexribed  the 
inconvenience 
of  giving  up 
the  purchase 


Surely  you  do  not  mean  to  let  your  kitchen 
cabinet  lie  forfeited  after  securing  It  at  such  a 
bargain  and  making  two  payments  on  It.   Think 
what  It  means  to  you  every  day  to  he  relieved  of 
all  the  little  baking  day  troubles  which  the 
Sxcelslor  eliminates. 

How  annoylnc  to  go  back  to  the  old-fash- 
ioned flour  sifters  that  allow  lumps  to  form,  and 
either  clog  or  scatter  flour  all  over  your  clean 
kitchen  floor.   That  would  you  do  without  the 
grooved  cutting  board  that  is  an  exclusive 
feature  of  the  Sxcelslor? 

Don't  you  like  to  keep  your  teas,  coffees 
and  epices  in  spick-and-span  labeled  canisters 
handy  to  your  work  table? 

These  features  alone  are  worth  the  price 
of  the  cabinet,  when  you  remember  how  long  it  la 
going  to  last. 

The  amount  now  due  (the  last  two  payments) 
la  only  $10.   Send  us  this  today,  while  you  are 
thinking  about  It.   Long  after  you  have  forgotten 
the  monthly  payments  of  $5.  you  will  think  of  the 
work  your  Excelsior  saves  you  day  after  day. 


A  second  letter  offered  reduced  payments  and  exten- 
sion of  time,  with  renewed  selling  arguments  which 
made  the  transaction  seem  a  personal  matter  between 


42 


PERSONALITY  LETTERS 


debtor  and  collector.  This  very  generous  and  sympa^ 
thetic  treatment  generally  puts  tiie  goods  in  the  stay  sold 
class. 

How   to  Handle   the  Delinquent   Who  Disappears 
Leaving  Unpaid  Bills 

An  instalment  house  found  that  a  debtor  had  moved 
away,  taking  with  him  the  property  on  which  several 
instalments  were  still  unpaid.     After  the  usual  routine 


To  Collect 
Difficult 

Instalment 
Accounts 


r 

New  Proofs  of  Value  in 
Purchase 

Re-sell  the 
"Give-up"  by 

-- 

Showing  Him  What  Others 
Have  Done 

- 

More  Convenient  Terms 

Prompt  Follow-up 


Line  up  the 
'Slow  Pay"  by 


Personal  Interview  to 
Adjust  Payments 


-    "House"  Agency  Pressure 


Warning  of  Replevin  or 
Garnishment 


Personal  Inquiries 


Trace  the 
"Skip"  by 


Co-operation  with  Other 
Houses 


Credit  Agencies 


C«rio8ity  Schemes  That 
Draw  Him  Out 


CHART  VIII:  The  "give-up,"  "slow  pay"  and  "skip"  make  the  instalment  collector 
lie  awake  nights.  The  chart  shows  some  of  the  ways  of  handling  these  classes  of  debtors 

of  quiet  investigation  following  ' '  tips ' '  from  other  cred- 
itors, a  registered  letter  receipt  located  the  debtor.  As 
the  instalment  man  well  knew,  however,  this  was  only 


INSTALMENT  ACCOUNTS  43 

the  beginning  of  his  problem.  He  saw  no  profit  in  the 
law-suit  which  seemed  inevitable;  he  knew  that  only 
quick  work  could  shock  settlement  out  of  the  "skip." 

Searching  for  a  scheme  emphatic  enough  to  get  in- 
stant attention,  impressive  enough  to  force  respect  and 
energetic  enough  to  induce  action,  he  found  a  printed 
paragraph  of  law  decidedly  effective. 

The  man  who  lags — who  instalment  by  instalment 
loses  ground — must  be  trained  to  promptness.  Some- 
times he  over-buys — "his  eyes  are  bigger  than  his 
pocket-book."  An  early  instalment  finds  him  without 
money.  A  second  and  third  instalment  pile  up  and  he 
grows  careless  or  hopeless.  Sometimes  he  is  avoiding 
payment  as  the  more  convenient  plan — the  incubator  is 
to  pay  for  itself — the  collector's  only  resort  is  "to  wait 
till  pay-day." 

Slow  pay  demands  treatment  at  the  first  symptom — it 
grows  worse  every  day  it  runs.  Get  on  the  trail  quickly. 
Use  every  effort  to  keep  customers  from  getting  more 
than  two  instalments  behind.  Have  the  over-due  ac- 
counts reported  to  you  with  exact  promptness.  Follow 
them  immediately  and  often  with  ammunition  held  in 
reserve  for  the  action — form  paragraphs  into  which  you 
can  inject  close  personal  appeals — form  letters  so  closely 
adapted  to  the  class  and  circumstances  of  the  debtor 
that  they  seem  intimately  personal.  At  the  first 
"feeler"  which  the  debtor  puts  out  in  his  plan  of  delay, 
teach  him  that  you  are  on  guard.  If  your  first  follow- 
up  fails,  find  some  plan  to  get  into  personal  touch  with 
the  delinquent  and  if  a  satisfactory  adjustment  does 
not  result,  follow  fast  with  agency  pressure  or  better 
yet,  with  suggestions  of  legal  action. 

Often  the  disadvantages   of  piled-up   bills  furnishes 


44  PERSONALITY  LETTERS 

the   theme   for  your  letter.     A   first   letter    especially- 
effective  with  women  customers  follows: 


o  e   J  Two   Instalments  due! 

Successful 

with  a  woman  Ho,  we  are  not  nervous. 


customer;  a 
"first"  letter 


But  we  know  how  much  easier  it  is  to  clear 
up  two  instalments  than  to  have  three  or  four 
discouraging  bills  past  due.   In  order  to  help 
you  not  to  fall  behind  another  paymant — to  make 
it  easy  for  you  and  give  you  the  satisfaction  of 
knowing  that  you  are  paid  up  to  date,  we  offer 
you  this  arrangement  for  immediate  acceptance. 

Mail  the  first  past-due  instalment  tomor- 
row — pay  the  second  with  the  third  when  it  comes 
due  next  Wednesday.  That  will  clear  up  things — 
we  will  look  for  your  first  remittance  before 
February  9th. 


One  of  the  most  effective  instalment  letters  a  suc- 
cessful city  trade  furniture  dealer  has  developed  is  this: 

Effective  with  if  convenient  to  you-  can  you  drop  in 

n  f~ti*i/Ymj>r  nf         Tuesday,   October  18th,    to  talk  over  your  account? 
u  ctwttrwwT- cy  j^   ^^  ^^^  considerably  in  arrears;   two  instal- 

gOodlTUenilons       ments— $8.00,   are  due.     You  want  us  to  know  what 
is  the  matter,   dom't  you? 

The  result  of  this  letter  was  to  arouse  the  curiosity 
of  the  debtor,  at  the  same  time  making  him  somewhat 
uneasy.  His  response  at  once  developed  his  attitude 
and  suggested  an  adjustment  or  severe  action. 

The  elements  of  the  final  collection  notice  are  curtness, 
a  definite  action  required,  a  definite  date  set  and  evi- 
dence that  the  account  will  be  pushed.  An  effective 
"last  letter"  was  worded  thus: 

Applying  Save  court  costs  by  calling  at  our  store 

the  "thumb  before  February  15th.  in  regard  to  your  past  due 

screw'  account  of  $68.00. 

As  his  adverti.somonts  say,  the  instalment  man  must 
grant  "credit  to  all,"  so  that  he  may  expect  the  maxi- 


INSTALIMENT  ACCOUNTS  45 

mum  percentage  of  trouble-making  debtors.  In  a  sense, 
your  instalment  buyers  take  their  cue  from  you.  If  you 
are  too  harsh,  they  are  ready  to  surrender  the  merchan- 
dise aad  give  up  trying  to  pay.  If  you  are  slow  or  un- 
systematic, they  fall  into  line  behind  you.  If  you  ac- 
quire the  reputation  of  letting  "skips"  get  away,  this 
will  become  a  big  source  of  loss  to  your  house.  Prompt- 
ness, fairness,  inevitable  certainty  in  tracing  men  and 
enforcing  payment,  make  instalment  accounts  line  up 
and  keep  step. 


Know  Your  Man 

CREDIT  men  should  draw  an  imag- 
inary circle  about  each  customer. 
The  circle  may  be  only  a  mile  in  cir- 
cumference or  it  may  be  several  hun- 
dred miles,  but  it  represents  the  sphere 
of  the  customer's  activities.  Every- 
thing in  that  circle  having  any  bearing 
on  the  customer's  business  should  be 
recorded  on  the  credit  man's  cards  or 
in  his  brain.  No  limited  range  of  in- 
formation will  suflSce,  for  it  is  only  by 
knowing  all  about  a  man  that  you  can 
judge  him  accurately. 


CHAPTER  VI 


Blocking  out  a  Letter  Camp)aign 

BRINGING  in  the  money  without  making  enemies  or 
losing  trade — the  aim  in  every  collection  problem — 
depends  upon  the  tactful  persistence  with  which  you 
keep  to  your  debtor's  trail.  Results  hinge  on  the  use 
of  a  letter  series  adjustable  to  the  conditions  surround- 
ing every  individual  debtor. 

By  adopting  a  system  of  clock-work  precision  to  lure 
in  the  dollars  due,  you  rid  yourself  of  many  minor 
details.  Work  out  two  points:  (1)  a  close  organization 
of  the  collection  department,  and  (2)  a  comprehensive 
letter  series  for  delinquents. 

Within  the  department,  the  system  hinges  upon  a 
clean-cut  policy  towards  outstanding  accounts,  and  an 
automatic  system  of  follow-up  which  will  keep  the  debt 
uppermost  in  the  delinquent'?  mind. 

Fix  upon  the  matter  of  terms  for  customers;  then, 
whatever  your  choice  may  be,  carry  your  terms  promi- 
nently on  sales  slips,  bill  heads,  invoices  and  statements. 
In  fact,  all  of  the  credit  department's  notes  and  papers 
should  show  the  sales  term,  so  that  there  can  be  no  pos- 
Bibility  of  misunderstanding. 

The  second  step  of  organization  within  the  house  is 

46 


MAPPING  OUT  A  CAMPAIGN  47 

promptness  in  handling  accounts  when  due.  The  gen- 
eral rule  is  to  submit  a  bill  or  invoice  with  goods,  follow 
with  a  statement  on  the  first  of  the  month — or  a  stated 
period  after  date  of  invoice — and  with  a  first  letter  in 
from  ten  to  twenty  days.  See  to  it  that  delinquent  bills 
appear  on  your  desk  at  regular  intervals.  Determine 
the  time  between  letters  by  the  distance  of  your  cus- 
tomer from  the  office,  the  possibilities  of  delay  in  the 
mail,  and  your  classification  of  the  prospect.  If  you 
assume  a  lenient  attitude  towards  a  customer,  the  re- 
minder may  be  withheld  longer  than  where  prompt  com- 
pliance with  terms  of  sale  is  insisted  upon.  A  fifteen- 
day  interval,  as  a  general  rule,  has  been  found  satis- 
factory. But  be  prepared  to  make  any  variation  from 
the  automatic  routine  dictated  by  good  judgment. 

How  to  Make  Your  Letter  Series  Carry  the  Details 
of  Your  Campaign 

"When  you  have  your  house  organization  complete, 
work  out  a  letter  series  planned  and  tested  not  only  for 
the  strength  and  length  of  the  letters,  but  especially  for 
their  flexibility.  "Write  each  letter  so  that  a  reply  will 
allow  a  change  to  a  secondaiy  series,  a  form  paragraph 
book  or  a  specially  dictated  letter.  Look  ahead  and  if 
the  answer  to  your  first  frequently  hints  dissatisfaction 
with  the  goods,  have  a  stock  letter  to  dispose  of  the  ob- 
jection, or  turn  to  a  "paragraph  book"  in  which  you 
have  indexed  strong  paragraphs  written  to  fit  various 
situations.  Instead  of  dictating  a  letter,  write  on  the 
bottom  of  the  debtor's  letter  the  numbers  of  the  para- 
graphs which  fit  his  case.  If  a  secondary  series  or  a 
para^aph  book  is  impractical,  dictate  a  special  letter  in 
reply  to  any  regular  letter  and  after  the  proper  interval 


'48 


PERSONALITY  LETTERS 


has  elapse,  been  allowed  to  resume  the  letter  series. 
In  this  way  a  number  of  stock  letters  are  often  drawn 


-    Secopd  Letter 


Vour 
Talk 


First  Letter     - 


I-      MiketbeTooe 


-    Put  P"ir*Tfrit  fi    -  -j 


p 

G«atal                        1 

FhttertoB                    | 

L 

Diptomatic                    | 

f 

Faitoes*                     j 

Pride                        1 

>- 

Re-seHiog                    { 

pi    M^«  6m  Toot     -  -T 

\ 

.ft 
}-£ 


Urgent  ■ 


Warning 


iuMice  of  C3aka 


Laat  Attempt  taR*«cU 


-    Third  Letter    - 


MMkedttTone 


£ 


Cotd  BkMtoeas  A^ipeol 


ThreateniDg 


~|       Bosiness  Error  Not  tofc^y 


K 


PMCffifriMltOO     _ 


CoDsequeoces  PaadMK 


Legal  Proceediat* 


I—   Fourth  Letter 


f—     Make  tfae  T<aie 


Abrupt 


-c 


Temporrzing  Ended 


Date  for  Payment 


—    Put  EmptnstB  6a 1   Severe  Measures  Contcoiplated 


Last  Chance  to  Avoid  Actioa 


H. 


Must  Pay  Now 


CHART  rX:    Four  letters  will  collect  the  ordinary  commercial  account,  but  the  series 

must   be   progressive.      Tone   and    emphasis  must  grade  natuniUy  from  mildness  to 

severity.    The  chart  outlines  the  form  of  letters  in  a  test  campaign 

up,  and  the  collector  can  branch  off  from  the  regular 
series  at  any  point.    Thus,  there  is  a  letter  which  thanks 


MAPPING  OUT  A"  CAMPAIGN 


49^ 


the  customer  for  a  remittance,  another  which  acknowl- 
edges payment  on  account  but  urges  a  further  settlement 
and  others  for  answering  stock  objections  and  excuses. 
It  must  be  borne  clearly  in  mind,  however,  that  form 
letters  used  too  extensively  are  apt  to  take  the  personal 
tone  out  of  the  collector's  work  and  thereby  reduce  re- 


First  letter 
of  a  success- 
ful series 

Dear  Sir: 

I  encloao  a  memorandum  of  your  account, 
which  is  now  several  weeks  past  due. 
Probatly  the  fact   that   the  amount   is   so 
small  has  made  you  overlook  it. 

As  these  small  accounts  are  Incurred  for 
the  benefit   of  our  patrons  and  do  not 
permit   expense   in  the  way  of  collecting, 
I  am  writing  to  you  personally.      Please 
make  out  a  check  for  this   sum  and  send  it 
to  me  immediately. 

Don't  bother  about  writing  I  under- 
stand how  these  oversights  occur.      Just 
pin  your  check  to   this   letter  and  mail   it 
to  me  in  the  addressed  envelope  enclosed. 
Thank  you. 

Yours  very  truly,, 

A  good  natu 
throughout  an 
arousing  his  i 
continues  to  t 
paragraph,  wh 
of  writing  anc 
an  addressed 

red  reminder  which  keeps  the  "You  and  I"  attitude 
d  which  prods  the  debtor  toward  payment  without 
esentment.     Fair  play  talk  which  opens  the  letter 
36  last  line.     Payment  is  made  easy  by  the  thirc 
ich  saves  the  delinquent  the  bother  or  humiliation 
which  removes  mechanical  obstacles  by  supplying 
envelope. 

suits.  The  best  use  of  stock  letters  or  paragraphs  is  "to 
flush  the  game."  When  the  debtor  has  been  driven  from 
cover,  personal  letters  fitteo  to  hi?  individual  character- 
istics are  in  order. 

"Whether  your  letter  campaign  consists  of  letter  forms 
to  be  copied  by  the  stenographer  at  your  direction,  or  a 
printed  form  letter,  make  your  series  progressive.  Don't 


50 


PERSONALITY  LETTERS 


•unmask  your  heavy  artillery  in  the  first  skirmish.  Grad- 
ually increase  the  pressure  on  the  delinquent.  Four  to 
Beven  letters,  ranging  in  tone  from  mildness  to  severity, 
will  do  the  work,  and  in  the  majority  of  cases  four  let- 
ters is  sufficient. 


A  second 
letter  for  the 
slow  pay 

Dear  Sir: 

We  wrote  you  several  days  ago  requesting 
a  remittance  to  cover  your  account. 

Evidently  the  letter  did  not  reach  the 
proper  person  or  department  in  your  office 
as  we  have  received  neither  remittance 
nor  reply. 

As  this  merchandise  was  shipped  to  you 
on  the  5th  of  January  and  as  it  was  dis- 
tinctly understood  that  our  terms  were 
cash  30  days,   we  are  at  a  loss  to  under- 
stand your  attitude  in  this  matter.     Per- 
haps the  goods  have  not  arrived  or  having 
■been  received  are  unsatisfactory  in  some 
way.      If  so,    let  us  know  at  once  and  the 
matter  will  te  adjusted  promptly. 

At  any  rate,   you,    as  a  husiness  man.   will 
appreciate  the   fact   that  unless  we  have 
a  sufficient  reason  for  your  actions,    it 
will  he  impossible  for  us  to  permit  your 
account  to   remain  in  this  condition. 
Please  explain  why  you  have  not  made  a 
payment  as  agreed  or  send  us  a  check  by 
return  mail. 

Yours  very  truly. 

After  sendi 
linquent  of  hi; 
this  form  for 
willingness  to 
the  house  or  t 
paragraph  wa 
harsher  methc 

ng  statement  and  a  letter  mildly  reminding  the  de- 
3  indebtedness,  an  Eastern  specialty  company  uses 
a  second  letter.    While  firm,  the  writer  shows  a 
be  reasonable  if  non-payment  is  due  to  a  fault  oi 
0  an  unavoidable  cause.  The  crisp  snap  of  the  final 
ms  that  the  time  .or  temporizing  is  past  and  that 
ds  are  to  ae  lookeo  for. 

This  plan  does  not  mean  to  thin  the  first  letter  in 
order  to  give  force  to  the  second  or  third.  Every  letter 
lias  its  definite  theme  and  tone.     The  first  is  merely  a 


MAPPING  OUT  A  CAM'^  AIGN  51 

reminder  of  an  account  overdue.  The  keynote  is  genial- 
ity. Here  is  an  opening  paragraph  of  a  letter  written 
by  a  Milwaukee  haberdasher.    He  says: 

"You  have  doubtless  overlooked  paying  the  inclosed 
account  of  $43.27,  now  past  due.  We  will  appreciate  it 
if  you  will  let  us  have  a  prompt  remittance." 

The  letter  is  warm  and  friendly  without  being  wheed- 
ling. If  the  customer  has  some  good  reason  for  not  pay- 
ing the  account,  the  way  is  open  for  him  to  say  so.  The 
possibility  of  offense  is  avoided  by  permitting  the  cus- 
tomer to  assume  that  the  writer  considers  non-payment 
due  to  an  oversight. 

Contrast  the  haberdasher's  letter  with  the  brutal  di- 
rectness of  a  Cleveland  retailer  who  said : 

"Your  account  is  now  overdue  and  we  would  like  to 
have  it  settled  promptly.  Kindly  remember  that  when 
we  extended  the  privilege  of  a  clmrge  account,  it  was 
with  the  distinct  understanding  that  your  hills  would  he 
taken  care  of  promptly  when  due." 

This  letter  brought  the  money,  but  cost  business.  The 
customer  who  overlooked  an  account  or  had  failed  to 
pay  because  of  a  sufficient  reason,  paid  up,  but  promptly 
transferred  his  account  elsewhere.  The  "poor  pay,'* 
moreover,  was  unshaken. 

How  Sales  Paragraphs  in  the  Collection  Letter  Coax 
Dollars  from  Unwilling  Pocket  Books 

You  can,  with  advantage,  add  sales  talk  to  the  first 
collection  letter.  In  spite  of  his  slight  delinquency,  your 
customer's  business  is  still  valuable;  therefore,  a  short 
paragraph  showing  appreciation  of  the  debtor's  business 
or  suggesting  a  special  bargain,  has  value.  This  sales 
paragraph  may  point  out  buying  values  which  have  been 


52  PE'^SONALITY  LETTERS 

overlooked;  testimonials  from  other  customers  may  be 
inserted;  your  problem  is  one  of  advertising.  Here  is 
a  sales  paragraph  used  with  good  effect  by  a  St.  Paul 
clothier : 

^^ Perhaps  you  have  7iot  re-opened  your  account  with  tis 
hecause  you  have  h'cen  putting  off  the  selection  of  your 
fall  suit  and  do  not  feel  quite  ready  to  buy.  You  mil 
want,  of  course,  to  make  your  selection  from  our  full 
stock  of  patterns  and  exclusive  styles.  Come  in  now, 
while  our  fall  line  is  complete.  You  will  he  sure  to  find 
here  just  what  you  want,  at  prices  that  will  suit  you." 

The  idea  behind  sales  talk — overcoming  the  diffidence 
of  the  man  who  owes  and  bringing  him  into  the  store — 
can  be  varied  in  scores  of  ways. 

Routine  replies  to  any  "first"  letter  can  be  handled 
by  the  secondary  system  or,  if  the  occasion  demands,  by 
a  dictated  letter.  If  these  first  attempts  fail,  turn  back 
to  the  letter  series. 

Make  your  secondary  letter  decidedly  urgent  in  tone. 
In  most  cases  the  account  is  still  valuable  to  the  house, 
however,  and  you  will  not  care  to  risk  offending  a  cus- 
tomer. Let  your  letter  carry  sales  talk,  but  not  to  any 
length. 

An  opening  for  a  good  second  letter  now  used  by  a 
large  wholesale  house  runs  like  this: 

*' Although  we  wrote  you  ten  days  ago,  informing  you 
thai  your  account  was  past  due,  we  have  not  teen  fa^ 
vored  with  a  remittance.  It  was  agreed,  as  you  know, 
tliat  our  terms  were  to  he  net  cash,  and  as  the  account  is 
getting  quite  old,  we  must  ask  you  to  settle  it 
promptly." 

A  brief  selling  talk  similar  to  that  in  tne  first  letter 
follows.    Others  use  the  second  letter  to  advance  the  jus- 


MAPPING  OUT  A  CAMPAIGN 


53 


tice  of  their  claims.    Frequently  the  action  of  slow  pay 

customers  is  caused  by  delays  or  errors  in  shipment  or 

other  faults  of  the  house.    The  wise  correspondent  uses 

\the  second  letter  to  uncover  and  dispose  of  any  dissatis- 


A  third  letter 
which  gets 
action  from 
bad  pays 

Dear  Sir: 

Your  account   Is  now  60  days   overdue! 

Don't  you  see  that  by  treating  us  in 
this  unjust  and  unbusinesslike  manner, 
you  are  seriously  Injuring  your  own 
credit? 

We  are  reluctant  to  think  that  you  are 
willfully  ignoring  this  account,    disre- 
garding our  rights  and  your  standing  as 
a  reputable  business  man,  but  we  will  be 
compelled  to   assume  this  attitude  If  you 
allow  this  letter  to  remain  unanswered. 

We  would  much  prefer  to  believe  that 
there  has  been  some  good  reason  for  this 
condition  of  affairs;  but  if  you  give  us 
no  explanation  we  shall  have  to  consider 
your  silence  as  practically  an  Invitation 
to   take  any  action  necessary  to  protect 
our  interests.                 .^,     , 

Please  remit  immediately  on  receipt  of 
this  letter  so  that  we  will  not  be  ob- 
liged to  put  this  account  In  the  hands  of 
an  attorney  in  your  tiity.   an  action  that 
will  Inevitably  result  In  loss  to  you. 

Very  truly. 

Third  letter 
letters  have  fa 
debtor  to  a  re 
carries  a  stro 
paragraph  by 
with  an  uninis 

■ 

in  a  series  written  after  statements  and  two  milder 
iled  to  get  results.    The  first  sentence  startles  the 
alization  of  his  delinquency.    The  second  sentence 
Qg  utility  appeal  which  is  reinforced  in  the  third 
an  address  to  the  reader's  pride.    The  note  closes 
takable  threat  of  drastic  action. 

faction.  In  most  cases  the  second  letter  will  bring  in 
the  money  or  at  least  develop  a  basis  for  settlement  by 
individual  correspondence.  If  it  fails,  turn  again  to 
your  letter  series. 


54 


person^vijIty  letters 


Be  curt  in  your  third  letter.  Give  your  reader  to  un- 
derstand that  you  have  shown  him  a  favor  in  extending 
the  account  so  far  as  you  have  and  end  by  telling  him 
definitely  that  you  insist  upon  payment  being  made 
upon  a  certain  date.  Point  out  the  disadvantages  which 
bill  dodgers  are  certain  to  suffer.  Hint  that  you  are 
quite  ready  to  take  the  case  into  court  if  you  are  forced 
to  do  so.  Outline  the  resources  you  have  for  forcing 
payment,  such  as  credit  associations  and  business  alli- 
ances with  competitors. 


Final  notice 
to  delin- 
quents 

Dear  Sir: 

We  have  written  you  three  times  asking 
payment  of  your  past  due  account  of  $23.  00. 
You  have  not   only  ignored  all   of  our  let- 
ters,  but  you  have  failed  to  give  us  any 
reason  whatever  for  your  delay  in  making 
payment. 

Under  these  conditions  we  will  not  carry 
this  account  any  longer  for  you  and  un- 
less you  pay  it   hy  the   15th  of  May  we 
shall  at  once  place  it   in  our  attorney's 
hands  for  immediate  suit,   without   further 
notice  to  you. 

Yours  very  truly. 

This  curt  s 
the  three  earli 
ment.    The  le 
lawyers  or  co 
promise  made 

tatement  of  fact  is  mailed  bad  pays  after  bills  anc 
er  letters  of  the  series  have  failed  to  secure  a  settle- 
tter  is  the  collector's  last  shot.     After  it  is  mailed 
lection  agencies  are  called  in   to  carry  out  the 

While  in  the  earlier  letters — the  first  particularly — 
you  invite  an  excuse  from  the  customer  for  not  paying, 
the  third  letter  assumes  that  no  valid  reason  can  exist 
for  not  living  up  to  the  terms  of  the  sale.  Write  it  in 
this  way: 

*'We  have  written  you  tmce  previously,  asking  pay- 
ment  of  your  account  of  $27.90,  hut  you  have  not,  as  yet, 


MAPPING  OUT  A  CAMPAIGN  55 

settled  it,  nor  have  you  given  us  any  reason  for  your 
failure  to  do  so." 

You  can  follow  this  opening  paragraph  by  a  hint  of 
harsher  methods  to  make  your  debtor  pay.  An  effective 
phrasing  for  the  second  paragraph  is  this : 

"Are  you  going  to  force  us  to  take  legal  means  to  col- 
lect our  little  account?    Surely  not." 

Continue  by  showing  your  customer  the  weakness  of 
his  position  and  the  strength  of  yours.  If  you  have  rea- 
son to  believe  that  this  line  of  attack  will  not  budge  your 
man,  intimate,  but  do  not  threaten,  his  ultimate  humil- 
iation. Let  him  contemplate  the  consequence  pending. 
Close  with  a  paragraph  reading : 

"We  shall  wait  ten  days  before  adopting  extreme 
measures.  In  that  time  we  sincerely  trust  that  you  may 
see  how  very  much  better  it  will  he  for  both  of  us  to 
dispose  of  this  matter  in  friendly  fashion.'' 

If  you  are  certain  of  your  debtor's  obstinacy,  substi- 
tute for  the  foregoing  paragraph  a  line  like  this: 

"Spare  us  the  necessity  of  suit  by  sending  us  a  check 
right  away." 

Make  the  fourth  letter  of  your  series  short  and  imper- 
ative in  tone.  In  your  preceding  letters  you  have  re- 
minded and  attempted  to  sell,  jogged  the  memory  of  the 
delinquent  a  second  time  and  attempted  to  spur  him  to 
action.  As  that  method  failed,  the  evident  recourse  left 
is  the  law. 

Do  not  temporize,  therefore,  in  the  final  letter.  Open 
with  a  line  recording  how  long  the  account  has  been 
ignored.  Curtly  state  that  you  do  not  propose  to  carry 
it  any  longer  and  conclude  with  the  plain  fact  that  un- 
less the  account  is  paid  within  a  stated  number  of  days 
suit  will  be  begun  without  further  notice. 


56  PERSONALITY  LETTERS 

After  the  final  letter,  an  attempt  may  be  made  to  get 
in  personal  touch  with  the  delinquent,  either  by  sales- 
mauy  by  telephone,  or  by  a  personal  call,  with  a  view  to 
ascertaining  if  there  is  a  reasonable  chance  of  avoiding 
&uit.  It  is  unwise,  however,  to  re-open  the  case  by  cor- 
respondence after  the  letter  has  been  sent,  as  it  will  les- 
sen the  force  of  previous  efforts.  You  have  worked  up 
the  pre^ure  of  your  series  and  given  your  man  a  fair 
chance  to  arbitrate  at  every  juncture;  the  emphasia 
must  be  maintained  to  the  climax. 


Credit  is  Essential 

BUSINESS  sense  or  business  fear 
may  be  the  prompting  factor  in 
collections.  A  merchant  realizes  that 
his  future  success  depends  entirely 
upon  the  credit  favor  which  he  can  ob- 
tain at  the  houses  from  whom  he  wish- 
es to  buy  goods. 

This  realization  will  cause  him  to 
establish  the  same  relations  with  credit 
men   as  personal  friendliness  dictates. 

The  personal  friendliness  and  sym- 
pathy of  the  collector  will  be  found 
more  successful  than  any  number  of 
hard  and  fast  rules  and  written  records, 
no  matter  how  businesslike  they  may 
appear. 


Part  II 


TESTED  SCHEMES  FOR 
SPECIAL  CASES 


Set  Him  Thinking 

I_I  OW  to  put  Bother,  Resistance,  Uncertainty 
*  ■'^  in  the  path  of  non-payment — how  to  con- 
vince your  man  that  delay  will  prove  disad- 
vantageous— that  the  one  simple  and  safe 
thing  is  to  pay  up — 

There  you  have  the  problem  of  all  the  novel 
and  clever  appeals  by  which  leading  collection 
managers  clear  the  way  between  the  debtor 
and  payment;  put  the  favorable  considerations 
on  the  side  of  promptness;  crowd  every  disad- 
vantage into  the  other  side  of  the  scales. 

The  plan  that  collects  hard  accounts  must 
be  like  the  scheme  that  pulls  more  sales.  It 
must  get  under  the  debtor's  skin — prove  the 
friendly  fairness  of  your  position — make  him 
smart  under  the  unfairness  of  his  delay. 

Guard  against  the  twists  and  angles  of  de- 
layed payment.  Allow  no  excuse,  no  chance 
to  get  out  of  sight,  no  ground  for  complaint. 

Show  your  man  his  interest  in  promptness. 
Then  find  the  scheme  that  flashes  your  appeal. 

Get  his  attention.  Make  payment  easy. 
Then  hint  what  delay  may  bring — make  eva- 
sion hard — set  him  thinking. 

Ef    5 


■ii: 


:iil 


HOW  TO  PUT  EXTRA  PRESSURE 
ON  OBSTINATE  DEBTORS 


Collection 
Schemes 


Reinforce  Your 
Letters  with 


-    Self-addressed  envelope 


Remit-easy  Cards 


Tags  and  Reminders 


-     "Good  Fellow"^AppeaI 


"I  Helped  You" 


-    Advertising  Judgment 


Bother  Debtor 

into  \-\- 

Payment  by 


Sending  Collector  to  Wait 


Notifying  Employer 


-  Dunning  Over  Telephone 


J      Writing  on  Special 
Stationery 


Take  Legal 
Steps  as 


Garnishment 


Replevin  of  Goods 


Suit  for  Judgment 


Suit  for  Damages 


CHART  X:     There  are  few  debtors  on  the  average  list  who  won't  paf. 

Most  of  them  are  merely  slow  pay  and  you  need  only  jog  their  memory. 

The  chart  suggests  schemes  which  will  startle  them  to  action 


Vlllt 


:ii« 


CHAPTER  VII 


Effective  Appeals  to  Debtors 

PLANNING  schemes  which  will  jolt  the  safe  but  slow 
pay  delinquent  out  of  his  self-complacent,  "Oh,  let 
him  wait,"  makes  the  collection  man  lie  awake  nights. 
Pressure  of  the  proper  sort  can  be  applied  to  the  ordi- 
nary debtor  with  comparative  ease,  but  the  surly  and 
sulky,  the  careless  and  indifferent  must  be  approached 
in  a  novel  way.  They  have  to  be  started  into  dropping 
their  dollars  into  the  cash  drawer  of  their  creditors. 

This  is  the  class  which  requires  all  the  ingenuity  of 
the  credit  man  and  his  collectors.  Callous  to  the  ordi- 
nary methods  of  approach,  this  sort  of  debtor  can  be 
handled  only  by  an  attack  from  an  unexpected  quarter. 

The  classification  runs  from  the  bride  who  confesses 
that  she  doesn't  "know  a  thing  about  busdness"  to  the 
polished  business  man  who  by  specious  argument  and 
clever  talk  has  lured  the  credit  man  into  planning  un- 
safe terms  for  goods.  The  rule  behind  most  schemes 
and  levers  for  the  collection  of  such  accounts  is  to  make 
the  debtor  feel  the  danger  of  his  position.  Make  him 
see  that  the  consequences  you  are  rolling  up  will  cost 
him  more  than  the  dollars  are  worth. 

It  may  be  necessary  to  wear  him  out — never  let  up, 

59 


60  TESTED  SCHEMES 

but  make  payment  his  only  exit  from  an  embarrassing 
situation.  Schemes  effective  on  such  a  class  have  (1) 
the  attention  value  of  novelty;  (2)  the  threatening  value 
of  uncertainty. 

How  a  Two-Word  Letter  Opened  Up  the  Pocket- 
hooks  of  Tardy  Debtors 

Two  words  forming  the  complete  text  of  a  letter  make 
up  the  best  collection  scheme  in  use  by  a  Chicago  in- 
strument house. 

A  correspondent  had  dictated  a  strong  letter  to  a 
Siulky  debtor,  opening  with  the  words  "We  positively." 
In  transcribing  her  notes,  the  stenographer  misspelled 
a  word,  and  instead  of  erasing,  jerked  the  sheet  out  of 
the  machine.  This  note,  being  only  the  name,  address 
and  words,  "We  postiv-",  a  careless  office  boy  mailed. 
The  next  day  the  debtor,  who  had  ignored  all  other  at- 
tempt to  get  in  touch  with  him,  mailed  back  the  letter 
with  a  note  of  inquiry.  The  correspondence  so  started 
ended  with  payment  in  full. 

The  idea  was  successfully  tried  on  other  debtors,  and 
is  now  a  part  of  the  collection  system.  It  almost  in- 
variably induces  the  debtor  to  break  silence.  The  com- 
plete letter  as  it  now  stands  is  typewritten  on  a  house 
letterhead  to  identify  the  sender  and  consists  of  the 
ordinary  salutation,  followed  by  the  words  "We  pos- 
itiv — "  There  is  no  signature.  A  sense  of  uncertainty 
and  insecurity  is  roused  in  the  debtor's  breast.  The 
"positiv — "  implies  a  strong  threat  of  decisive  action. 
The  feeling  of  insecurity  thus  aroused  makes  some 
debtors  answer;  curiosity  leads  others  to  reply;  others 
are  delighted  to  rub  in  a  few  "nasty"  remarks  about 
slack  office  system.     An  apology  for  the  "mistake"  is 


EFFECTIVE  APPEALS  61 

mailed  in  reply  and  forms  the  basis  for  future  corre- 
spondence that  in  the  end  brings  in  the  money. 

A  similar  idea  used  in  St.  Louis  consists  of  increasing 
the  size  of  envelopes  with  each  letter  to  a  debtor.  The 
ordinary  size  cover  used  on  the  first  letter  increases  to 
an  envelope  nearly  a  foot  square  at  the  third  attempt  to 
collect.  The  last  letter  is  as  large  as  the  postoffice  will 
handle.  Some  debtors  need  only  be  impressed  with  the 
fact  that  collection  has  gone  beyond  the  ordinary  routine 
to  make  them  pay.  That  is  the  reason  why  stationery 
with  the  "Credit  Department"  or  "Legal  Department" 
comer  card  moves  some  debtors  to  payment. 

The  collection  proof  debtor,  wise  to  the  tricks  of  the 
trade,  is  too  wary  to  be  snared  by  a  curiosity  appeal,  but 
his  business  knowledge,  gained  by  former  encounters 
with  creditors,  can  be  used  to  his  undoing.  A  Detroit 
house,  advised  by  a  debtor  to  "go  ahead  and  sue.  Court 
costs  will  amount  to  more  than  the  bill, ' '  realized  on  the 
debtor's  experience  with  legal  complications.  The  cor- 
respondent assured  him  that  suit  would  be  begun  on  a 
certain  date,  and  stated  that  according  to  his  routine, 
when  he  secured  judgment,  it  would  be  advertised  and 
sold  to  the  highest  bidder.  The  certainty  of  business 
publicity  made  the  delinquent  beg  off. 

The  publicity  appeal,  however,  is  a  boomerang  if  not 
carefully  handled.  A  collector  had  on  his  list  the  wife 
of  the  janitor  of  a  fashionable  apartment  house.  Fail- 
ing to  find  her,  he  left  a  note  stuck  in  the  mail  box,  in 
the  belief  that  she  would  return  in  a  few  minutes,  read 
and  destroy  it.  The  Bot/e  said:  ''Mrs.  Wilkins,  do  the 
people  who  employ  you  know  tJiat  you  have  not  paid 
for  the  clothes  you  are  wearing?" 

Mrs.  Wilkins  did  not  return  until  after  many  of  the 


'62  TESTED  SCHEMES 

apartment  tenants  had  seen  the  note  attached  over  the 
mail  box  and,  being  unfamiliar  with  the  names  of  their 
neighbors,  believed  it  to  be  addressed  to  the  fashionable 
holder  of  that  particular  apartment.  Suit  followed  her 
discovery  of  the  note  and  she  obtained  heavy  damages 
for  the  humiliation  she  suffered. 

Some  collectors  scold  delinquents  over  a  telephone. 
The  curiosity  of  subscribers  on  a  party  line,  especially 
in  the  rural  districts,  is  so  well  established  that  the  de- 
linquent pays  up  rather  than  to  have  his  affairs  spread 
over  the  neighborhood.  Some  houses  reinforce  mail 
efforts  by  sending  a  uniformed  collector,  by  instructing 
the  collector  to  talk  loudly,  or  by  telling  him  to  wait 
until  the  bill  is  paid.  Only  in  extreme  cases,  however, 
where  delinquency  is  flagrant,  can  such  methods  be 
reconciled  with  business  sagacity. 

A  Seattle  man  calls  up  his  debtors  at  an  assigned 
minute  every  day.  The  victim — not  to  consider  his 
work-mates — soon  becomes  aware  that  the  telephone  call 
at  one  minute  past  ten  is  from  his  persistent  creditor, 
and  still  he  cannot  ignore  the  ring  and  possibly  over- 
look an  immediate  communication  from  one  who  has 
secured  the  telephone  a  few  seconds  ahead  of  the  collec- 
tor. The  debtor  has  some  satisfaction  in  slamming  the 
receiver  onto  the  hook  as  soon  as  the  speaker  becomes 
known,  but  the  steady  persistence  with  which  the  tele- 
phone rings  every  day  at  the  same  minute  suggests  the 
payment  way  out. 

How  the  Collector  Plays  Detective  and  Ferrets  Out 
the  New  Stopping  Place  of  the  "Skip" 

Closely  allied  to  the  "won't-pay"  class,  but  generally 
lacking  in  cunning  and  shrewdness,  is  the  "skip,"  always 


EFFECTIVE  APPEALS  63 

found  on  the  delinquent  list  of  houses  which  collect  by 
mail.  Distance  makes  him  immune  from  ordinary 
schemes  of  collection.  He  has  found  that  as  a  general 
rule  it  is  cheaper  to  move  than  pay  bills.  Here  cunning 
is  matched  with  cunning. 

"When  the  mail  man  returns  the  collection  letter 
marked  "forwarding  address  unknown,"  the  collection 
man's  highest  skill  is  called  into  play  in  tracing  the 
bird  that  ^...o  flown.  If  he  is  wise,  he  is  prepared  for 
just  such  a  condition  and  has  a  dozen  ways  of  finding 
the  missing  person. 

One  collector  gets  an  accurate  line  on  all  his  customers 
by  giving  an  accident  insurance  policy  as  a  premium 
with  the  8'oods.  The  policy  is  cheap,  as  the  liability  is 
limited.  But;  if  the  buyer  "skips,"  he  can  be  traced 
through  the  heirs  and  beneficiaries  noted. 

The  registered  mail  will  locate  a  missing  man  in  a 
general  way,  as  you  can  have  the  postoffice  department 
require  the  person  addressed  to  sign  a  receipt.  This 
receipt  returned  to  the  sender  locates  the  town  in  which 
the  "skip"  lives.  Directories  or  personal  agencies  do 
the  rest. 

Another  manner  of  tracing  found  acceptable  is  to  get 
in  touch  with  storekeepers  near  the  former  home  of  the 
debtor  and  offer  a  small  prize  for  accurate  information. 

Some  houses  keep  tab  on  the  debtor's  bank.  If  the 
buyer  dodges  payment  by  moving,  a  courteous  letter  to 
the  bank  generally  brings  the  new  address  of  the  client. 
Some  creditors  trace  by  making  up  a  fictitious  letter- 
head and  offering,  under  some  excuse  or  other,  to  send 
the  person  addressed  a  free  souvenir  spoon.  A  reply 
fixes  the  debtor's  address,  and  collection  efforts  are  re- 
sumed. 


64  TESTED  SCHEMES 

Another  house  instructs  its  salesmen  to  inquire  about 
children  in  the  family  when  the  goods  are  sold.  The 
name  of  the  school  they  attend  is  noted  and  if  the  par- 
ents move  they  may  be  found  through  the  transfers 
given  by  the  school  authorities. 

Every  collection  man  has  his  own  box  of  tricks  to 
meet  low  cunning.  The  variations  which  he  plays  upon 
detective  schemes,  curiosity,  embarrassment  and  persist- 
ency are  without  number.  Analyzed,  they  all  hark  ba<>k 
to  one  principle.  Debtors  who  refuse  to  pay  are  in  the 
wrong  and  know  it.  Pajrment  follows  the  use  of  a 
scheme  which  brings  to  a  focus  the  elements  of  anxiety 
and  uncertainty  which  lurk  in  their  minds. 


The  Stitch  in  Time 

CUSTOMERS  go  to  an  instalment 
man  because  they  are  offered  long 
time  credit — a  concession  they  cannot 
get  elsewhere.  They  are,  therefore, 
under  more  than  a  mere  obligation  to 
pay — they  are  under  emphasized  obli- 
gation to  respond  promptly  to  any 
reasonable  request  of  yours. 

It  is  far  more  difficult  to  collect  two 
instalments  than  one  and  the  farther 
behind  a  customer  falls  the  less  profit- 
able his  purchase  becomes  to  you. 
Early  persistence  is  better  than  later 
sacrifices. 


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i 

CHAPTER  VIII 
Enclosures  That  Reinforce  Your  Letter 

PATRONS  of  a  depot  news  stand  in  a  New  York 
suburb  had  the  habit  of  grabbing  a  magazine  in 
a  rush  for  a  train  and  calling  instructions  to  charge 
it  over  their  shoulders  as  thej'^  hurried  to  the  cars.  The 
news  stand  man  found  the  little  items  of  a  few  cents 
to  one  or  two  dollars  a  month  were  sometimes  almost 
impossible  to  collect  at  a  profit. 

Customers  forgot  their  indebtedness  on  account  of  the 
extremely  small  amount  due,  but  the  monthly  items 
when  totaled  made  a  difference  between  profit  and  losa 
He  disliked  to  dun  a  man  for  a  few  cents  and  yet  it 
was  just  this  sort  of  account  which  was  getting  him  into 
serious  difficulty.  Money  rolled  in  when  he  hit  upon  a 
plan  of  substituting  aluminum  checks  for  regular  state- 
ments. The  metal  blanks  reads  "Wayne  Wagner,  Sta- 
tioner.   You  owe  me." 

These  coins,  about  the  size  of  a  quarter,  were  mailed 
in  coifi  cards  which  carried  a  good  natured  suggestion 
of  the  difficulty  of  collecting  small  accounts  and  asked 
the  customer  to  place  the  check  in  his  pocket-book  or 
change  pocket  as  a  reminder.  The  scheme  was  suc- 
cessful.   ]\Ian  after  man  turned  back  his  check  and  the 


65 


66  TESTED  SCHEMES 

amount  due  with  a  happy  comment  on  the  dealer's  plan. 

"Wagner,  confronting  a  situation  which  retailer  and 
manufacturer,  professional  man  and  service  company, 
all  encounter,  picked  it  to  pieces  and  by  his  analysis 
found  the  reason  for  non-payment.  "Every  one  of 
these  men  intends  to  pay  me,"  he  thought.  "Every  one 
has  at  any  moment  money  needed  to  pay,  but  hardly 
a  man  would  not  resent  my  most  tactful  public  request 
for  payment.  The  only  way  to  get  the  money  is  to  pro- 
vide them  with  a  shrewd  and  silent  reminder." 

In  a  similar  way,  analyze  the  problems  of  collection 
which  baffle  you.  Is  your  problem  that  of  the  stationer  ? 
Vary  his  scheme  to  fit  your  needs.  Send  the  debtor  a 
duplicate  sales  slip  or  provide  him  with  an  easy-to-carry 
reminder  which  will  keep  the  bill  uppermost  in  his 
mind.  Must  you  remove  an  obstacle  in  the  debtor's 
way?  Send  a  self -addressed  envelope.  Offer  to  accept 
the  risk  of  currency  sent  through  the  mails.  Make  pay- 
ment easy  by  furnishing  him  the  convenience  that  would 
good-naturedly  spur  you, 

A  Prize  Essay  Contest  Which  Drew  ilie  Net  Arourtd 
Slow  Fay  Customers 

A  Kansas  storekeeper  cleaned  up  his  bad  accounts  by 
a  subtle  threat  of  notoriety.  Driven  to  close  financing 
by  his  bulk  of  slow  pay  accounts,  he  startled  the  popu- 
lace in  his  town  of  2,000  with  an  advertisement.  In  it 
he  pointed  out  the  efilccts  of  the  loose  credit  system 
which  he  had  adopted.  He  announced  his  purpose  of 
making  a  change  and  ofFered  cash  prizes  for  the  best 
essay  of  two  hundred  words  on  "How  to  Collect  Slow 
Accounts. ' '  He  printed  the  best  essay  in  the  newspaper 
and  had  facsimile  clippings  struck  off.     A  lurid  head- 


ENCLOSURES  THAT  WIN  67 

line  on  the  clipping  attracted  attention  when  enclosed 
in  a  collection  letter  and  debtors  crowded  into  the  store. 
They  feared  that  he  might  actually  adopt  the  suggestion 
carried  in  the  prize-winning  essay,  that  of  publishing 
the  names  of  the  people  who  owed  him. 

Nobody  was  hurt,  no  one  was  angered  by  importuni- 
ties for  money.  The  dealer  studied  his  case  and  found 
a  remedy  for  it.  He  made  possible  gossip  a  potent  col- 
lection assistant. 

The  good  collector  is  a  quick  tliinker  and  stands 
ready  to  turn  slight  incidents  to  his  advantage.  A  New 
Orleans  correspondent  of  this  class  found  the  way  out 
in  an  interview  with  his  employer. 

Persuasion   That   Wins   the  Debtor's  Co-operation 
and  Lines  Up  One  Entire  Class  of  Accounts 

"We're  spending  entirely  too  much  time  on  these 
little  accounts,"  growled  the  chief,  when  the  collection 
man  answered  his  summons.  "I'm  going  to  make  an 
example  of  some  of  these  fellows  and  see  if  we  can't  get 
our  money  when  we  want  it  instead  of  waiting  until 
they  are  ready  to  pay.    Read  this." 

The  letter  handed  the  collector  was  addressed  to  the 
delinquent's  employer.  It  briefly  outlined  a  history  of 
the  case,  showed  that  the  debt  had  been  regularly  con- 
tracted and  continued  with  the  story  of  collection  at- 
tempts, quoting  excuses  made  by  the  debtor.  The  letter 
concluded  with  a  request  that  the  employer  "use  his  in- 
fluence" to  make  his  employee  pay. 

"Let  me  take  that  letter.  I'll  get  the  money  without 
sending  it,"  and  after  an  argument,  the  collector  got 
his  employer's  consent.  He  had  the  letter  copied  and 
enclosed  it  to  the  delinquent  with  one  of  his  own  in 


68  TESTED  SCHEMES 

which  he  related  the  circumstances  by  which  he  got  it. 
Following  paragraphs  warned  the  debtor,  pointed  out 
the  effect  of  the  letter  on  the  employer  and  suggested 
immediate  payment.  ''I've  done  my  best  to  help  you 
and  I'll  be  in  bad  if  you  don't  help  me,"  was  the  way 
the  collector's  letter  ended.  By  return  mail,  came  a 
check  in  full  and  a  letter  thanking  the  collector  for  his 
good  offices. 

While  other  ways  of  offering  help  to  a  debtor  suggest 
themselves,  some  collectors  reverse  the  proceedings  and 
offer  the  debtor  a  chance  to  help  them.  One  collector 
encloses  an  interdepartment  note  which,  signed  by  the 
president,  carries  a  "call-down"  for  lax  collection 
methods.  The  correspondent  in  forwarding  the  note 
writes  that  he  has  to  his  loss  been  lenient  with  the 
debtor  and  concludes  by  asking  the  debtor  to  help  him. 
Proof  of  the  collector's  dilemma  is  in  the  debtor's  hands 
and  it  has  an  effective  pull  on  the  good-fellow  class. 

Selling  talk,  suggested  for  the  first  collection  letters, 
can  be  strengthened  by  the  addition  of  a  sales  circular 
of  proved  pulling  power.  One  house  which  has  made 
effective  use  of  this  plan  encloses  circulars  in  all  ** first" 
collection  letters.  The  reader,  eager  to  secure  the  new 
article,  proves  his  good  faith  in  ordering  by  paying  up 
his  indebtedness. 

Novelty  is  the  magnetic  force  in  any  collection  scheme 
or  inclosure.  Don't  use  the  stale  and  transparent  de- 
vice. Get  the  idea — ^build  upon  it  for  yourself.  All  of 
the  schemes  outlined  are  susceptible  to  change  by  the 
collection  man.  They  merely  need  some  twist  or  turn  or 
presentation  from  a  new  angle  to  lend  freshness  to  your 
methods.  Follow  the  principle  of  business  analysis  and 
fit  the  idea  to  the  man. 


CHAPTER  IX 
Details  to  Watch  and  Errors  to  Avoid 

PUTTING  a  premium  on  procrastination,  that's 
what  weVe  been  doing,"  said  the  president  of  a 
specialty  house  to  his  collection  manager.  ' '  We  've  been 
offering  discounts  and  inducements  to  the  settlement  of 
bad  accounts  until  our  debtors  sit  back  and  wait  for  the 
*  cash-up'  offer  that  suits  them. 

"And  we're  going  to  stop  it.  Now.  Hereafter  our 
favors  are  going  to  the  people  who  pay  their  debts  when 
due." 

The  new  policy  was  followed  to  the  letter,  and  tests 
showed  its  wisdom.  More  money  was  received  by  de- 
manding payment  on  a  business  basis  than  was  re- 
ceived under  the  cash-up  system.  Debtors,  knowing  the 
house  policy,  had  deliberately  deferred  paying  and 
awaited  the  payment  in  full  offer  that  suited  them. 
When  letters  showed  that  the  house  would  go  no  farther 
in  its  cash-up  offers,  they  sent  in  their  money. 

Inducements  were  the  short  end  of  the  expense  and 
loss  involved.  The  offer  canglit  only  the  cream  of  the 
trade — the  men  who  would  have  paid  anyhow.  Delay  in 
bringing  in  accounts,  extra  stamps,  stationery,  clerk  hire 
and  bookkeeping  all  combined  to  run  up  collection  costs. 

69 


70  TESTED  SCHEMES 

The  new  plan — that  of  sending  clean-cut  collection  let- 
ters which  wound  up  with  notice  of  suit — shortened  the 
time  of  collection  and  won  over  debtors  who  had  tossed 
the  cash-up  offers  into  the  waste  basket. 

Though  condemned  by  a  majority  of  collection  men, 
the  cash-up  scheme  of  bringing  in  money  is  still  used. 
The  unthinking  collector  fails  to  realize  that  he  is  train- 
ing the  debtor  in  delinquency.  By  rewarding  the  slow 
pay  man,  he  takes  away  the  incentive  to  prompt  pay- 
ment. He  not  only  rolls  up  obstacles  for  other  business 
men,  but  he  destroys  chances  of  prompt  payment  in 
other  business  bargains  with  his  debtors. 

If  it  is  advisable  from  the  nature  of  your  business  to 
give  discounts  for  cash,  give  all  the  customers  a  chance 
at  the  savings.  Show  the  list  of  premiums  or  discounts 
on  your  bill  of  sale  so  that  the  buyer  knows  in  advance 
all  the  profits  which  lie  in  cashing  up. 

Getting  Away  from  Blunders  and  Makeshifts  Which 
Clog  the  Gears  of  the  Collection  Machine 

Another  time-honored  scheme  as  ancient  and  as  in- 
effectual as  the  cash-up  is  the  sight  draft  which  many 
collectors  depend  upon  to  force  debtors  into  line.  But 
a  draft  only  irritates  a  customer,  throws  a  week's  extra 
routine  between  you  and  your  next  move,  and  destroys 
chances  of  a  peaceful  settlement. 

Credit  and  collection  men  now  unite  in  condemning 
the  method.  They  use  sight  drafts  only  with  some  dis- 
tinctive variation  or  when  the  method  has  been  agreed 
upon  in  advance.  Generally,  sight  drafts  are  attached 
by  agreement  to  the  bill  of  lading  when  partial  pay- 
ment of  a  big  shipment  is  to  be  made  on  delivery. 

A  sight  draft  which  has  some  effect,  but  which  is  los- 


COLLECTION  LETTER  DONTS  71 

ing  its  efficiency  through  general  use,  is  the  credit  asso- 
ciation's form.  This  is  the  regular  sight  draft  form 
with  the  association's  name  printed  on  it.  If  it  is  not 
paid  on  demand,  the  bank  turns  the  draft  over  to  the 
agency's  attorney,  who  proceeds  to  collect. 

You  can  raise  your  average  of  collection  returns 
greatly  by  watching  the  little  details  which  may  seem  at 
first  to  be  inconsequential.  Don't  threaten  a  debtor 
with  punishment  in  one  letter  and  be  contrite  in  the 
next.  If  your  man  forces  you  into  threatening  suit,  sue 
on  the  date  set.  Your  action  will  increase  his  respect 
for  you  and  make  your  delinquents  pay  quicker  there- 
after. 

Don't  heap  abuse  on  the  head  of  the  debtor.  Abuse 
rolls  off  the  back  of  the  dead-beat,  makes  the  honest  man 
angry  and  may  rouse  a  spirit  of  obstinacy  which  will 
further  delay  matters. 

Organize,  develop  a  method  and  system  in  your  collec- 
tion department,  but  don't  blindly  follow  the  rules  you 
lay  down.  Make  your  schemes  yield  to  judgment.  Run 
your  system;  don't  let  it  run  you. 

Don 't  request  payment  as  a  favor.  In  asking  for  your 
money,  you  are  demanding  your  right.  Make  the  debtor 
see  it  in  that  way. 

Don't,  by  your  lax  methods,  educate  a  customer  into 
taking  his  own  time  for  payment  and  blame  him  for  the 
fault  when  you  happen  to  need  money.  If  your  cus- 
mers  are  slow  pay,  examine  yourself.  The  chances  are 
that  you  are  to  blame  for  their  delinquency. 

Study  the  state  and  federal  laws  regarding  libel  and 
blackmail 

Keep  these  laws  in  mind  when  collecting  by  telegram. 

Don't  write  a  dun  on  a  postal  card  or  send  a  bill 


72  TESTED  SCHEMES 

under  a  one-eent  stamp.     You  may  r\m  foul  of  post- 
office  regulations. 

Don't  indicate  on  the  envelope  the  contents  of  a  col- 
lection letter.  Be  careful  what  you  say  to  a  debtor  if 
your  remarks  go  by  mail.  Consult  the  pamphlet  of  in- 
formation issued  by  the  postal  service.  Remember  that 
the  post  office  includes  as  unmailable  matter,  letters 
which  are  scurrilous,  defamatory,  threatening  or  dun- 
ning in  character  and  obviously  intended  to  reflect  in 
juriously  upon  the  character  or  conduct  of  another. 


Know  the  Debtor's  Mind 

REMEMBER  that  most  men  want 
to  pay  their  debts  and  do  not  con- 
sider any  man  dishonest  until  he  has 
proved  himself  so. 

Do  not  resort  to  threats  of  severity 
until  conditions  absolutely  demand 
them. 

The  debtor  who  has  been  hardened 
and  aggravated  by  the  ordinary  "give- 
me-my-money"  letter  will  have  a  pleas- 
ant surprise  if  you  first  show  him  a 
personal  understanding  of  his  case. 

Your  cordial  willingness  to  be  reason- 
able will  get  your  money  while  the 
man  who  flies  to  early  threats  waits 
for  his. 


5" 


tH 


Part  III 


WHEN  AND  HOW  TO 
FORCE  PAYMENT 


Set  the  Pace 

V\7HEN  an  account  lags,  put  it  back  to 
your    pace.       When    a    debtor    balks, 
make  a  test  of  him. 

Find  the  trouble — get  a  settlement. 

If  it's  your  mistake,  get  right. 

If  your  debtor  only  is  at  fault,  find  whether 
it's  his  cheat  or  his  blunder. 

When  a  debtor  blunders,  help  him  pay.  You 
can  get  your  money  and  his  friendship  by 
quick  action. 

When  he  cheats,  use  tlw  whip. 

Make  him  pay.     Train  him  to  come  to  time. 

Look  ahead.  Make  yourself  familiar  with 
collection  law.  Learn  how  far  you  can  go — 
what  help  you  can  enlist — when  and  where  the 
final  steps  to  force  collections  and  make  ex- 
amples of  debtors  are  worth  while. 

Know  the  road.  Hold  the  whip.  Then  set 
the  pace  and  train  your  debtors  to  keep  it. 

m  Dj 


1ili: 


If  ■ 


■            HOW  TO  CROWD  A  DEBTOR  INTO 
PAYMENT 

m 

Aid  Him  with  His 
Collections 

Help  Him 
Get  Money 

_    Arrange  Time  Payments 
for  Him 

Check  His  Losses  and 
Extravagances 

Personal  Work 

In  an  Interview 

Apply 
Pressure 

By  Cutting  o«  Credit 

Through  Banks 

Withhold  Credit 

Have  Credit 
Organization 

Trace  "Skips" 

Last 
Resorts  in  - 
Collecting 

^            Force   Payment 

Cooperation 
with  Other 
Creditors 

-     Help  Debtor  over  Crisis 

■ 

Consolidate 
Accounts  to 

Conduct  Forced  Sale 

-  Have  Receiver  Appointed 

Libel 

Watch  Legal 
Points 

Blackmail 

The  Law 

Fraud            , 

Make  Up  a  Merit  List 
of  Lawyers 

Work  with 
Attorneys 

Follow  Thorn  Closely 
for  Action 

CHART  XI 

ary  methods 
^        catcs  methoc 

:    When  your  deb 
[ail  to  move  him  tr> 
Is  successfully  usee 

tor  stubbornly  bai 

'  cooperation  and 

in  brinKing  relu 

Its  at  payment  and  ordin- 
the  law.     The  chart  indi- 
ctant  deh'nquents  to  time 

■ 

■ii: 


:iii 


CHAPTER  X 

Personal  Work  That  Saved  Bad 
Accounts 

HARLOW,  a  credit  man  for  a  wholesale  house,  saved 
his  company  a  loss  by  accepting  a  note  secured 
by  apparently  worthless  timber  land.  A  few  years  after 
the  retailer  failed,  the  property  was  sold  for  more  than 
the  face  of  the  note. 

Wilkins,  seeing  that  one  of  his  customers  was  on  the 
rocks  because  of  poor  collection  methods,  went  over  the 
debtor's  books  and  set  out  one  of  his  own  men  to  col- 
lect from  the  debtor's  customers. 

Wright,  in  talking  over  store  affairs  with  a  delinquent, 
discovered  that  the  dealer  was  over-loaded  with  stock 
which  could  not  be  converted  into  cash  by  ordinary 
methods.  Combining  with  other  wholesalers,  Wright 
sent  a  sales  expert  to  the  delinquent's  town,  closed  out 
the  stock  on  a  narrow  margin  and  got  enough  cash  to 
pay  all  debts  and  leave  the  dealer  with  sufficient  balance 
to  begin  over  again. 

Personal  resourcefulness  of  these  collectors  brought  in 
the  money  where  routine  methods  would  have  failed. 
Collection  work  is  to  commerce  what  diplomacy  is  in 
international  affairs.    The  aim  of  the  collector  and  dip- 

75 


76  HOW  TO  FORCE  PAYMENT 

lomat  is  to  adjust  tactfully  without  employing  extreme 
measures.  To  resort  to  force  is  costly  both  in  immediate 
expenditure  and  future  loss,  and  the  best  collector  puts 
compulsion  far  in  the  background,  while  keeping  it  in 
sight  and  within  reach.  It  is  at  this  point  that  the  col- 
lection man  proves  his  worth.  His  cleverness,  his  inge- 
nuity and  his  varied  forms  of  appeal  or  attack  are  what 
convert  debts  into  dollars.  Here  he  makes  the  personal 
equation  count  by  adapting  himself  to  the  special  con- 
ditions which  confront  him. 

How   Applied   Personality   Binds    the    Delinquent 
Customer  to  the  Retail  Stoi*e 

Personal  resourcefulness  counts  greatly  in  getting 
money  from  the  prominent  citizens  with  prestige  but 
without  cash.  The  dealer  has  to  extend  credit  courte- 
sies in  accordance  with  the  customer's  place  in  the  com- 
munity, and  yet  such  purchases  must  be  kept  as  nearly 
as  possible  on  a  cash  basis.  Their  accounts  have  been 
termed  "influential  but  not  good". 

Your  plan  in  dealing  with  these  debtors  must  be  in- 
dividual. You  may  find  a  premium  or  discount  scheme 
which  makes  cash  trade  fashionable  and  economical. 
You  may  circulate  advertising  matter  showing  cash  pur- 
chase savings  and  selling  that  policy  to  your  customers. 

One  marketman  who  changed  from  a  credit  to  a  cash 
basis  retained  his  former  trade  by  securing  a  cash  de- 
posit from  his  customers  at  the  first  of  every  month. 
Purchases  made  were  charged  against  this  deposit.  The 
system  did  away  with  the  greatest  objection  to  cash 
trade,  that  of  having  to  keep  money  on  hand  to  pay  the 
grocery  boy.  Often  an  exchange  can  be  arranged,  so 
that  the  dealer  handles  art  work,  needle  work,  fruits, 


PERSONAL  WORK  77 

truck  or  preserves  for  the  customer  and  thus  keeps  the 
balance  of  trade  favorable. 

A  New  York  store  owner  writes  a  personal  letter  to 
the  doubtful  retail  customer  and  asks  him  to  call.  The 
little  talk  on  credit  which  takes  place  during  the  inter- 
view influences  the  debtor  to  pay  up.  Frequently  the 
story  told  by  the  customer  exposes  bad  blunders  in 
your  system  and  selling  methods.  By  bringing  these  to 
the  head  of  the  store  and  having  them  corrected  you 
can  often  hold  the  complaining  customer  and  prevent 
other  symptoms  of  loss  which  appear  first  on  the  charge 
pages  of  the  ledger. 

Warner,  a  retail  merchant,  found  his  worst  trouble 
in  holding  customers  who  had  been  extended  credit. 
These,  instead  of  continuing  their  trade  and  giving 
him  the  little  cash  they  had,  turned  to  a  competitor 
because  they  were  ashamed  to  face  the  man  they  owed. 
When  a  delinquent  shows  a  tendency  to  break  away, 
Warner  calls  him  by  telephone  and  asks  him  to  come 
to  the  store.  The  customer  cannot  refuse,  knowing 
himself  to  be  under  obligations,  but  when  he  comes  in 
he  is  not  dunned.  Intead  he  is  shown  a  nice  line  of 
goods  just  unpacked.  He  is  told  why  the  new  stock 
is  specially  adapted  to  his  use  and  is  asked  to  make 
his  choice  while  the  lot  is  unbroken.  Disconcerted  by 
the  new  method  of  treatment  and  flattered,  the  cus- 
tomer sometimes  buys  and  pays  his  old  bill  on  the  spot. 

How  to  Get  Into  Personal  Touch  with  the  Delin- 
quent and  Bring  Insialm.ent  Accounts  Up  to  Date 

This  scheme  of  approaching  a  bad  pay  from  an  en- 
tirely unexpected  angle  is  similar  to  the  method  adopted 
by  the  collector  for  an  Omaha  instalment  house.    Abuse 


78  HOW  TO  FORCE  PAYMENT 

is  the  keynote  of  his  rival's  methods  in  collecting.  Debt- 
ors are  scolded  and  threatened.  The  Omaha  man  has 
developed  a  system  of  faee-to-face  collections  and  made 
it  win. 

His  men  call  on  a  bad  pay  debtor  and  endeavor  to 
encourage  him,  instead  of  devitalizing  his  efforts  by  con- 
demning him  for  passing  bills.  The  delinquent's  con- 
fidence returns  as  he  sees  that  men  of  less  ability  and 
earning  power  than  his  are  crying  and  praying  for  sim- 
ilar comforts. 

As  a  result  of  the  talk,  the  delinquent  generally 
makes  an  offer  of  payment.  He  either  over-estimates 
or  under-estimates  what  he  can  do.  In  the  first  case,  he 
is  cut  down.  "We  don't  want  to  rob  you,"  is  the  tone 
of  the  collector's  talk.  If  he  under-estimates,  the  col- 
lector confidentially  informs  him  that  the  house  is  about 
to  begin  strenuous  collection  methods  and  that  it  would 
be  well  to  get  under  shelter  before  the  storm  breaks. 
One  or  the  other  point — raising  or  lowering  the  man's 
proposition — seldom  fails  to  win. 

If  you  are  an  instalment  collector  like  Parker,  a  retail 
man  like  Warner,  or  a  wholesale  man  of  the  Wright 
stamp,  do  as  they  did — turn  from  the  time-worn  trail, 
find  a  new  way.  Try  for  human  interest.  Sound  the 
situation  by  letter  or  agent.  Send  your  bank  or  credit 
or  attorney  service  to  investigate.  Better  yet,  as  a  last 
resort,  get  on  the  ground  yourself  and  use  your  judg- 
ment. Consider  a  new  basis  of  payment  —  plan  co- 
operation—  make  an  exchange  bargain  —  look  for  sal- 
vage. Apply  your  latent  personal  resourcefulness  to 
solve  the  individual  difficulty  and  bring  the  money  in. 


CHAPTER  XI 

How  Far  Can  I  Legally  Push 
Collections  ? 

ROUSED  by  a  debtor's  pert  insolence,  a  St.  Paul 
collector  wrote  the  man's  guarantor  a  sympathetic 
account  of  his  behavior  and  added  a  blustering  opinion 
of  his  conduct.  The  delinquent  got  hold  of  the  letter. 
His  lawyer  brought  the  collector  into  court  on  charges 
of  libel  and  blackmail,  and  the  firm  was  glad  to  send  a 
receipt  in  full  to  avoid  further  trouble. 

The  correspondent  who  wrote  the  letter  had  always 
understood  blackmail  as  the  extortion  of  money  for  the 
promise  of  silence  about  a  disgraceful  secret.  Libel  he 
considered  to  be  false  statements  which  injured  the  rep- 
utation of  a  man.  But  he  found  blackmail  to  be  "extor- 
tion by  intimidation ;  especially  extortion  of  money  by 
threats  or  accusation."  Libel,  he  learned,  is  "any  state- 
ment published  without  just  cause  or  excuse,  expressed 
either  in  print  or  in  writing,  tending  to  expose  another 
to  public  hatred,  contempt  or  ridicule."  The  fact  that 
his  remarks  about  his  debtor  were  true,  or  that  he  be- 
lieved them  to  be  time,  did  not  alter  the  case.  He  had 
committed  libel  and  could  have  been  punished  severely 
had  the  case  not  been  settled  out  of  court.    The  lesson, 

79 


80  HOW  TO  FORCE  PAY]\IENT 

though  a  hard  one,  made  him  careful  of  the  points  of 
law  which  infringe  on  collection  problems. 

Libel  and  blackmail,  however,  are  not  the  only  pitfalls 
for  the  unwary.  Fraud  is  a  trap  for  the  careless  cor- 
respondent. Apparently  unimportant  points  in  the 
wording  of  a  contract  may  get  him  into  trouble.  To  be 
safe,  the  experienced  correspondent  keeps  exactly  posted 
on  Postoffice  Rulings,  Interstate  Laws  and  State  Stat- 
utes. 

Little  Points  of  Postoffice   Billing  that  the  Corre- 
spondent May  Unwittingly  Violate 

The  postal  laws  have  been  enacted  to  prevent  the  use 
of  the  mails  as  an  instrument  of  fraud,  to  protect  citi- 
zens in  their  right  of  reputation  and  of  property,  and  to 
secure  generally  a  higher  standard  of  morality.  The 
question  which  puzzles  the  average  correspondent  is 
what  language  or  style  of  display  the  courts  consider  as 
falling  within  the  condemnation  of  the  statutes. 

Where  a  creditor  wrote  on  a  post  card,  ^'I  can  see 
very  plainly  that  you  do  not  intend  to  pay  any  atten- 
tion to  my  letters  or  your  agreements..  I  propose  to  get 
the  balance  due  on  that  claim.  I  shall  wait  no  longer, 
hut  will  see  what  can  he  done,''  the  court  held  that  the 
writer  intended  to  reflect  on  the  character  of  the  debtor. 
The  words  accusing  the  debtor  of  not  paying  any  atten- 
tion to  his  agreements  were  defamatory  in  nature,  and 
the  sender  was  liable  to  the  postal  law.  In  another  case, 
the  writer  concluded  a  postal  card  message  with  these 
words:  "I  will  garnishee  and  foreclose,  hut  I  dislike 
to  do  this,  if  you  will  only  be  half  white."  Had  the 
writer  of  the  card  omitted  the  last  clause,  he  would  have 
been  free  from  the  penalties  of  the  law,  for  the  court 


LEGAL  LIMITS 


81 


intimated  that  a  request  to  pay,  accompanied  by  the 
statement  that  the  creditor  intended  to  foreclose,  might 
not  be  of  such  a  character  as  to  render  the  postal  un- 
mailable;  but  the  last  sentence  was  clearly  intended  to 
reflect  upon  the  character  of  the  debtor,  and  the  writing 
was  illegal. 

On  the  other  hand,  the  following  language  which  was 
written  on  a  postal  card  was  held  not  to  be  illegal: 
"Why  do  I  iwt  hear  from  you?  I  see  plainly  I  shall 
have  to  press  this  matter.  I  must  hear  from  you  hy 
Wednesday  night.  I  shall  wait  no  longer."  Obviously, 
the  words  used  may  relate  to  an  account,  but  at  the 
same  time  they  may  relate  to  something  else.  Moreover, 
the  wording  is  such  that  the  character  of  the  receiver  is 
not  attacked  and  there  is  no  publication  of  his  delin- 
quency to  the  world. 


Legal  Points  to 
Watch 


State 
Statutes 


Blackmail 


Federal 

Interstate 

Laws 


Libel 


Fraud 


Post  Office 
Regulations 


CHART  XII:     Before  writing  the  collection  letter  be  sure  your  case  is  defensible  in  law 
and  be  careful  not  to  violate  the  courts'  definition  of  libel,  blackmail  and  fraud 


The  opinion  of  a  famous  New  York  lawyer  on  the 
postal  laws  is  to  this  effect :  That  a  simple  request  by 
postal  card  to  pay  is  not  illegal.  The  illegality  occurs 
only  when  the  language  is  libelous,  scurrilous,  defama- 
tory or  threatening,  or  when  by  its  terms  or  style  of 
display  it  is  written  to  reflect  injuriously  upon  the  char- 
acter or  conduct  of  another.  It  follows,  therefore,  that 
an  account  may  be  rendered  on  a  postal  card.    A  simple 


82  HOW  TO  FORCE  PAYINIENT 

request  for  payment  may  be  made,  together  with  a  state- 
ment of  any  conditions  such  as  discount  or  time.  State- 
ments on  cards,  asking  for  payment  on.  or  before  a  cer- 
tain day  and  indicating  the  discounts,  if  there  be  any, 
are  proper,  but  it  would  be  bad  policy  and  of  doubtful 
legalit}^  to  accompany  the  statement  with  a  threat  that 
the  account  would  be  placed  in  the  hands  of  an  attorney 
or  professional  collector  if  not  paid  on  a  certain  day. 

Furthermore,  any  remark  on  an  envelope  which  in- 
dicates the  character  of  the  letter  and  shows  that  the 
debtor  is  being  published  is  as  illegal  as  if  the  fact  were 
stated  on  a  postal  card.  The  only  difference  is  that  the 
card  accomplishes  the  purpose  by  actual  written  no- 
tice, whereas  the  envelope  accomplishes  the  same  pur- 
pose indirectly. 

Common  intelligence  and  a  sense  of  business  pro- 
priety usually  prevent  a  collection  correspondent  from 
violating  the  law.  The  law,  whether  it  originates  in  a 
state  or  a  federal  congress,  is  merely  the  state's  method 
of  enforcing  what  it  consider  common  justice  and  a 
due  regard  for  the  rights  of  others. 

To  Make  Collections  Certain,  Instruct  Salesmen  and 
Make  Contracts  Read  Right 

Legal  precautions  in  collecting  are  generally  begun 
when  contracts  are  drawn.  Sales  managers  at  this  point 
clear  the  way  for  the  collector  by  avoiding  prospects 
immune  in  case  of  dispute.  Such  persons  include  gov- 
ernment employees,  who  cannot  be  gamisheed.  In  some 
states  the  same  distinction  holds  true  of  a  state  em- 
ployee. Sailors  and  soldiers  are  sometimes  refused  goods 
on  instalments,  as  the  government  will  not  aid  col- 
lection efforts,  and  frequent  discharges    and    transfers 


LEGAL  LIMITS  83 

make  it  hard  to  follow  men  in  these  services. 

Houses  which  do  interstate  business  clear  away  the 
dead  wood  in  the  credit  department  by  keeping  a  digest 
of  the  collection  laws  of  each  state.  They  know  when 
a  man  is  immune  to  collection  efforts  or  what  creditors 
are  preferred  under  state  laws.  In  many  states,  deal- 
ers in  food  supplies  have  first  rights  in  collecting.  In 
other  states,  landlords'  rights  over  the  tenants  are  well 
established.  Such  information,  when  combined  with 
notes  regarding  chattel  mortgages  and  conditional  sales, 
make  the  way  of  the  collection  man  easier. 

Other  simple  precautions  which  must  be  taken  when 
drawing  up  a  contract  include  saving  clauses  such  as 
* '  goods  remain  the  property  of  the  seller  until  final  pay- 
ment is  made,"  and  "lapse  of  two  payments  makes  all 
other  payments  immediately  due."  The  latter  clause 
protects  the  creditor  who  forced  to  sue  to  get  a  first 
payment  for  goods  could  otherwise  be  forced  into  court 
on  each  succeeding  payment. 

Salesmen  sometimes  misrepresent.  The  contract, 
therefore,  should  bear  the  statement  that  "no  verbal 
agreements  will  be  accepted  by  the  company  unless 
noted  on  the  face  of  the  contract."  Very  often  the 
statement  "this  order  is  not  subject  to  cancellation"  is 
printed  prominently  on  the  contract. 

While  no  contract  of  any  importance  should  be  drawn 
without  the  advice  of  a  lawyer,  the  most  successful  sell- 
ing contracts  are  worded  in  language  so  simple  that  it  is 
easily  understood  by  the  laymen.  ]\Iost  men  read  a  con- 
tract before  signing  it,  and  the  ordinary  man  is  far  more 
ready  to  sign  a  simply  written  agreement  than  he  is  to 
put  his  name  to  a  ponderous  legal  form  which  he 
scarcely  understands. 


CHAPTER  XII 


How  Creditors  Work  Together 

MERCHANTS  of  one  himdred  and  twenty-eight  Illi- 
nois cities  and  towns  are  organized  to  beat  the 
professional  bill  dodger  at  his  own  game. 

In  each  city  a  local  credit  association  acts  as  a  clear- 
ing house  for  information  regarding  bad  debtors.  As 
a  result  of  information  exchanged,  the  man  who  refuses 
to  pay  his  bill  in  one  store  of  a  town  finds  it  impossible 
to  secure  credit  from  another  dealer.  His  record  is 
known. 

If  he  moves  to  another  part  of  the  state  his  situation 
is  no  easier,  for  the  first  question  asked  by  a  member 
of  the  association  in  getting  facts  on  which  to  base  credit 
is  "Where  did  you  live  last?"  The  customer's  record, 
forwarded  from  his  former  place  of  residence,  imme- 
diately checks  his  attempt  to  live  at  the  expense  of  oth- 
ers. The  association  thereby  saves  its  members  from 
loss  and  automatically  locates  the  debtor  for  the  benefit 
of  his  creditors. 

The  members  of  this  organization  have  taken  from  the 
Illinois  delinquent  his  most  effective  means  of  running 
up  debts,  which  was  to  trade  on  a  dealer's  ignorance  of 
his  rival's  affairs.     The  bad  pay    customer,    after    eX' 


CO-OPERATION  AMONG  CREDITORS        85 

hausting  his  credit  at  Smith's  grocery,  has  usually  gone 
around  the  corner  and  repeated  the  trick  at  Jones's 
store.  Jones,  at  the  start,  is  delighted  to  get  a  castomer 
from  Smith,  and  each  grins  at  the  thought  of  his  com- 
petitor's predicament.  The  customer  has  the  last  laugh. 
Lack  of  cooperation  between  retailers  is  the  source  of 
common  trouble.  When  the  fault  is  eliminated,  profits 
begin  to  show. 

Wholesalers  cooperate  through  the  use  of  the  merean> 
tile  agencies  to  head  off  bad  pay  dealers.  Large  organi- 
zations also  have  salesmen,  correspondents  and  systems 
of  exchanging  information  which  keep  up  credit  stand- 
ards. When  the  big  companies  are  caught,  they  com- 
bine as  a  matter  of  course  and  put  their  accounts  in 
the  hand  of  one  agent,  appoint  a  receiver  or  conduct 
forced  sales.  Similarly,  many  houses  have  suffiicient 
organization  to  secure  an  accurate  line  on  the  credit 
standing  of  the  people  they  ** trust".  Mutual  jealousies 
have  made  it  difficult  for  retailers  to  develop  along  this 
line  until  the  pressure  of  competition  has  driven  home 
the  elementary  lesson  that  sticks  easily  broken  one  by 
one  stand  the  strain  when  tied  in  a  bundle. 

Hoiv  Small  Retailers  Combine   to  Keep  Bad  Pay 
Accounts  Off  the  Books 

A  local  association  to  furnish  merchants  with  infor- 
mation similar  to  the  wholesalers'  commercial  agency 
service  can  easily  be  organized.  The  dues  required  are 
low  and  are  merely  sufiieiont  to  maintain  a  secretary 
and  office  organization.  Such  associations  investigate 
the  exact  responsibility  of  every  one  of  the  buying  pop- 
ulation of  a  town,  and,  when  possible,  cooperate  with 
merchants  in  nearby  towns  in  order  to  obtain  informa- 


'86  HOW  TO  FORCE  PAYMENT 

tion  concerning  new  residents.  Every  member  pledges 
himself,  on  joining,  to  extend  credit  to  no  one  on  the 
delinquent  account  of  the  organization. 

In  one  typical  case  the  retailers  of  an  Indiana  town 
began  war  on  sulky  debtors  by  an  announcement  in  the 
local  newspapers  outlining  the  scheme  and  accenting 
the  benefits  of  giving  credit  only  to  people  entitled  to  it. 
Editorials  demonstrated  that  the  man  who  defrauds  a 
merchant  compels  the  honest  customers  to  make  up  the 
loss  by  payment  of  higher  prices.  The  announcements 
and  editorials,  carefully  worded  to  secure  the  sympathy 
and  cooperation  of  the  public,  aroused  sentiment  in  favor 
of  the  dealers. 

Every  merchant  in  the  association  reinforced  the  news- 
paper publicity  by  a  circular  letter  which  called  the 
attention  of  delinquent  customers  to  the  new  scheme. 
On  the  first  of  the  month,  the  letter  went  on  to  say, 
every  merchant  had  to  furnish  the  association  with  a 
list  of  credit  customers.  The  writer  tactfully  suggested 
that  a  payment  of  the  balance  due  would  put  the  cus- 
tomer's name  on  the  approved  list.  Notices  and  letters 
got  immediate  results.  Slow  and  doubtful  accounts 
poured  in  without  any  of  the  hard  feeling  that  gener- 
ally follows  dunning  letters. 

Then  each  member  sent  to  the  secretary  the  name  of 
ev^ry  credit  customer  on  his  books,  good  as  well  as  bad. 
The  sheets  used  (Form  I)  classified  the  buying  pub- 
lic in  five  divisions.  The  merchant's  number,  known 
only  to  the  secretary,  identified  the  customer  list  from 
each  store.  Use  of  this  secret  "key"  prevented  any 
dealer  from  getting  a  surreptitious  peek  at  a  compet- 
itor's past  due  accounts  and  thus  estimating  his  finan- 
cial strength  or  the  percentage  of  his  losses  from  bad 


CO-OPERATION  AMONG  CREDITORS        87 


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88  HOW  TO  FORCE  PAYIMENT 

debts.  This  numbering  eliminated  all  doubts  which 
might  otherwise  have  arisen  as  to  the  safety  of  submit- 
ting such  information. 

The  dealers  estimated  the  standing  of  customers  by 
placing  a  check  in  one  of  the  five  numbered  columns. 
The  secretary  transferred  the  information  carried  on 
the  sheets  to  a  customer's  card  index  (Form  II).  As  a 
rule,  several  merchants  reported  every  buyer.  These 
various  ratings  checked  on  each  other  and  were  all  noted 
on  the  customer's  card  by  merchant's  number  and  col- 
umn number.  The  secretary  investigated  any  discrep- 
ancy in  rating.  The  cards,  filed  alphabetically  in  a 
flexible  horizontal  file,  readily  permitted  the  insertion  of 
newcomers'  names.  As  a  result,  the  secretary  had  up- 
to-the-minute  credit  information  about  everyone  in  his 
town. 

The  information  contained  on  the  credit  cards  is  sup- 
plied to  associated  dealers  on  mimeographed  sheets  as 
follows : 

Peinstein.  Yetta,  323  Yesler  Way :  :  :  :3:  $41. 

Perdinand.  Oscar  (Wid. ) .  232  Howard  St.    :1:4: 
Pernald.  L.  T.  (Martha).  716  Mich.  Av.  1:  :  :  :  : 
Prank,  George,  321  State  St 2:3:  :  :  : 

These  are  compiled  by  the  secretary.  The  pages,  filed 
in  loose-leaf  binders,  are  revised  from  time  to  time.  Five 
columns  at  the  right  of  the  page  correspond  to  the  five 
ratings.  The  figures  in  any  column  show  the  number 
of  the  merchants  who  have  reported  a  buyer  in  that 
town.  By  the  book,  a  member  may  instantly  discern 
the  credit  standing  of  anyone  in  town,  and  if  the  show- 
ing is  unfavorable,  he  is  required  to  withhold  credit 
asked. 


CO-OPERATION  AMONG  CREDITORS        89 


Retailer's 
final  letter 
to 
delinquent 


A3  a  member  of  the  Oklahoma  Retailers' 
Association,  we  'desire  to  advise  that  on 
the  day  one  week  hence  the  record  of 
your  credit  dealings  with  this  firm,  as 
evidenced  by  our  ledger  entries,  will  be 
given  into  the  hands  of  the  credit  mana- 
ger of  this  organization  for  entry  on 
its  credit  files. 


Our  books  show  that  you  are  indebted  to 
ua  in  the  sum  of  $48.00.   Since  this 
amount  is  past  due  we  must  ask  that  you 
call  at  once  upon  the  writer  hereof  and 
arrange  a  settlement  that  is  mutually 
satisfactory.   We  make  this  request  in 
order  that  our  estimate  of  yourself  as 
a  credit  customer  may  go  to  our  credit 
manager  clear  and  clean. 

In  explanation  permit  us  to  say  that  it 
is  not  the  purpose  of  this  organization's 
members  to  work  a  hardship  upon  any  of 
its  patrons. 

Being  joined  together.  howcTer,  for  work- 
ing out  problems  of  common  interest  to 
all  retailers  and  for  mutual  benefit  and 
protection  as  well,  we  desire  in  all 
deference  to  apprise  you  of  the  fact. 

Trusting  that  the  above  may  have  your 
careful  consideration  and  prompt  atten- 
tion, we  remain 


Yours  respectfully. 


Final  letter  to  a  delinquent  debtor  used  by  members  of  an  Okla- 
homa association  when  other  collection  methods  fail.  As  a  rule, 
the  debtor  succumbs  to  the  threat  of  lost  credit  standing,  but  if  he 
does  not  pay  up  in  ten  days  the  account  is  turned  over  to  the 
association  for  collection.  The  fact  that  all  the  members  use  the 
same  form  in  dealing  with  delinquents  impresses  the  debtor  with 
the  power  of  the  organization.  The  printed  letterhead  has  much 
to  do  with  the  effectiveness  of  the  note.  It  carries  the  names  of 
national  and  state  officers  of  associations  with  which  the  local  union 
is  affiliate.d.  Names  of  collection  lawyers  employed,  names  of  prom- 
inent members  and  the  line  "equitable  legislation,  mutual  pro- 
tection against  the  dead  beat,  advertising  grafter  and  catalog 
house"  warn  the  bad  pay  that  he  confronts  a  stone  wall. 


90 


HOW  TO  FORCE  PAY^IENT 


In  addition  to  providing  credit  information,  a  retail- 
ers' organization  in  the  middle  west  collects  "hopeless" 
accounts  for  members.  Three  form  letters  are  used, 
and  no  other  attempt  is  made  to  get  money  due.  Credit 
information  secured  through  these  collection  efforts  ia 
furnished  members  in  the  supplemental  bulletins.  The 
first  letter  is  mailed  by  the  merchant  after  all  regular 
collecting  schemes  have  failed.  Failing  to  get  a  reply, 
he  turns  the  account  over  to  the  association. 

The  seeretaiy  writes  two  form  letters,  and  dispatches 
them  ten  days  apart.  The  burden  of  their  argument  is 
the  credit-killing  power  that  lies  in  the  association  and 
the  result  of  loss  of  credit.  The  letters  generally  secure 
an  interview.  If  the  bill  is  an  unjust  one,  or  if  a  just 
complaint  is  made  by  the  customer,  the  matter  is  settled 
to  the  satisfaction  of  buyer  and  seller  by  the  secretary. 


Co-operate  with  Othe 
Creditors  by 


Fix  Amount  of 
Credit 

Thwart  Adempts 
to  Defraud 

Check 

ExtravaRance 

Force  Dfhnquenis 
to  Pay  Up 

Conduct  Forced 
Sales 

Arrange  Voluntary 
Receivership 

CHART  Xni:     Cooperation  prevents  bad  debts  and  is  a  powerful  lever  in  moving  a 

delinquent  to  payment.     It  is  the  most  useful  tool  of  the  collector  and  is  the  mainstay 

of  the  credit  department 

Whenever  a  debtor  has  forced  a  member  of  the  asso- 
ciation to  submit  a  just  bill  for  collection,  the  debtor's 
name  is  added  to  the  following  supplemental  bulletin, 
mimeographed  in  the  following  style : 

Wilson, 'U.  M.  (Single)  .  16  Sixth  St $12.00   CD** 

Winslow,  A.  D.  (Wid. ) ,  230  Chicago  Av. ...$56.34   A*'** 
Wisler.  T.  8.  (Martha).  34  Elm  St $25.00   J* 

This  information,  while  accurate,  is  anonymoiis.  The 
dealer  who  looks  up  a  customer  on  the  bulletin  finds 


CO-OPERATION  AMONG  CREDITORS        91 


Sear  Sir: 

We  have  had  placed  in  our  hands  for  Collection 
the  account  of  Walts  &  Co.  amounting  to  $39.00. 

Your  failure  to  pay  the  same  we  presume  has  been 
caused  more  by  neglect  than  from  any  intention 
not  to  pay  or  of  keeping  the  money  from  the 
creditor.  We  have  concluded  to  ask  you  to  call 
within  ten  (10)  days  and  arrange  for  some  settle- 
ment. 

We  are  sure  you  will  appreciate  the  Association 
writing  you  and  giving  you  this  further  opportun- 
ity for  adjustment. 

Yours  truly. 


P.S.-Our  members  are  advised  of  the  exact  be- 
havior of  parties  having  accounts  on  file  herein 
by  meana  of  our  report  which  is  issued  to  them 
monthly. 


Sear  Sir: 

We  have  given  you  ample  time  and  every  opportun- 
ity to  arrange  for  some  adjustment  of  the  account 
filed  against  you  in  this  department  in  favor  of 
Walts  &  Co.  amounting  to  $39.00,  and  as  you 
have  made  no  effort  to  do  so  we  beg  to  advise  you 
that  we  shall  now  resort  to  more  definite  action. 

Our  Collection  Department  keeps  a  record  of  the 
names  of  all  persons  who  fail  to  adjust  their  ac- 
counts.  This  is  published  for  the  protection  of 
other  merchants  in  the  city  and  keeps  them  from 
incurring  similar  indebtedness. 

Any  person  who  happens  to  appear  upon  our  records 
in  this  manner  will  find  it  not  only  annoying,  but 
very  difficult  to  obtain  credit  to  any  extent, 
and  such  information  will  act  as  a  cloud  upon 
their  reputation  for  honest  and  fair  dealing  with 
their  creditors. 

Yours  truly. 


Before  turning  accounts  over  to  a  retailers'  association,  the 
dealers  in  an  Indiana  town  warn  the  debtor  of  their  proposed 
action  by  means  of  a  form  letter  supplied  by  the  organization. 
If  the  warning  fails,  the  secretary  sends  these  letters  ten  days 
apart.    He  then  bands  the  account  to  an  attorney. 


92  HOW  TO  FORCE  PAYT^IENT 

that  a  storekeeper  of  a  certain  class — indicated  by  key 
letter — has  reported  a  customer.  But  he  has  no  means 
of  knowing  who  the  informer  is.     Stars  followincr  a  cus- 


Frank,  George 

432  State  Street. 

^^ 

^  % 

•^^ 

FORM  II:     On  this  card  the  secretary  enters  the  ratings  given  customers  by  each  mer- 
chant with  whom  he  has  dealt.    The  merchant's  code  number  appears  in  connection 
with  his  rating 

tomer's  name  picture  the  collection  efforts  made.  The 
code  is:  (*)  account  paid  since  last  bulletin;  (**) 
making  irregular  payments;  (***)  absolutely  refuses  to 
pay;  (****)  makes  indefinite  promises  of  settlement; 
(*****)  difficult  to  locate,  address  wanted.  The  speci- 
men bulletin  shows  that  Wilson  owes  $12,  his  creditors 
being  a  hardware  man  and  a  clothier,  and  that  he  is 
making  irregular  payments.  Winslow,  reported  by  a 
grocer,  owes  $25  and  is  making  indefinite  promises. 
When  a  customer  pays  up,  his  name  is  retained  on  the 
bulletin.  The  merchant  who  looks  him  up  may  decide 
whether  the  past  performance  will  be  repeated. 
This  plan  of  fixing  retail  credit    and    making    col- 


CO-OPERATION  AMONG  CREDITORS        93 

lections  has  been  adopted  with  success  by  associations  in 
largre  cities  as  well  as  small.  The  system  has  been  found 
satisfactory  by  professional  men,  especially  doctors  and 
dentists,  who  require  specific  credit  information. 

flhis  plan  of  cooperation  and  organization  enables  the 
dealers  of  a  town  or  state  to  cut  down  debts  and  increase 
the  margin  of  profit.  Good  pay  customers  also  reap  a 
share  of  the  benefits  from  this  financial  system. 

Hence  the  plan  wherever  tried  has  proved  popular 
with  the  public.  Commercial  clubs  and  chambers  of 
commerce  have  made  credit  associations  valuable  depart- 
ments. The  good  feeling  and  the  fellowship  engendered 
in  the  business  community  leads  to  better  town  spirit  by 
bringing  your  men  of  affairs  together  on  common, 
ground. 


Be  Fair 

THE  successful  collection  man  should 
have   that   most    precious   of    all 
characteristics — human  sympathy. 

He  must  not  as  some  believe  be  a 
born  pessimist  and  skeptic. 

In  dealing  with  men  he  should  be 
fair  and  meet  them  on  this  ground.  He 
should  make  customers  believe  in  the 
fairness  and  liberality  of  the  house. 


CHAPTER  XIII 

Handling  Collections  through  an 
Attorney 

WHEN  tlie  debtor  remains  obdurate  and  you  hand 
the  account  to  an  attorney  for  collection,  dan't 
stop  there..  Remember  that  collecting  is  often  the  pot- 
boiling  medium  of  the  attorney's  practice.  It  demands 
much  work  for  a  comparatively  small  fee  and  is  liable 
to  be  side-tracked  for  more  pressing  duties.  Dozens  of 
reasons  —  business,  political  and  social  —  may  keep  the 
lawyer  from  following  your  debtor  with  the  severity  you 
demand.  To  get  the  best  results  from  accounts  in  the 
hands  of  the  la\\yer,  keep  a  merit  list  of  the  local  col- 
lectors and  maintain  a  special  follow-up  system  to  keep 
your  agents  focused  on  their  work. 

A  New  York  collection  manager's  method  of  handling 
accounts  through  out-of-town  lawyers-  has  reduced  the 
cost  of  legal  collections  to  an  average  of  three  per  cent 
of  the  claim.  He  keeps  a  card  list  of  attorneys,  indexed 
by  states  and  counties.  Each  division  shows  the  name 
of  one  of  more  tried  collection  attorneys.  Salesmen  in 
their  weekly  rounds  keep  track  of  the  lawyers  in  their 
territory  and  report  any  change,  whether  by  partner- 
ship, death  or  removal.    Frequently  a  score  of  changes 

94 


USING  AN  ATTORNEY  95 

in  the  list  are  reported  from  these  sources  in  a  week. 

In  the  New  Yorker's  system  there  is  no  groping  in  the 
dark  when  a  lawyer  is  needed.  Even  in  remote  districts, 
where  lawyei*s  are  seldom  required,  an  account  placed 
in  legal  hands  gets  action.  The  list  carries  the  names 
of  men  who  need  business  and  consequently  will  make 
the  most  of  it.  Such  men  are  amenable  to  suggestion 
and  instruction;  they  work  with  the  house,  apply  its 
collection  policies  and  methods,  and  reduce  friction  be- 
tween correspondents  and  themselves  to  a  minimum. 

A  Minneapolis  house  goes  a  step  further  and  closely 
keeps  track  of  the  work  done  by  men  entrusted  with  its 
accounts.  "When  a  bill  is  handed  to  an  attorney,  the 
order  number  in  dispute  is  written  on  the  back  of  the 
lawyer's  card.  When  the  account  is  settled  the  result 
is  noted  in  the  same  way.  In  this  way  a  tested  list  of 
attorneys  is  always  on  hand.  When  lawyers  quit  or  are 
dismissed,  a  successor  is  chosen  by  his  record. 

When  an  out-of-town  attorney  is  at  work  on  a  case 
his  knowledge  that  the  creditor  is  busy  and  wide-awake 
regarding  the  account  keeps  him  on  the  jump.  Regular 
follow-up  is  essential.  Modify  the  card  tickler  to  the 
purpose  on  hand.  The  following  scheme  has  been  found 
effective  by  a  national  collection  agency  and  can  be 
adapted  to  any  business: 

Cards  6  x  10  (Form  III)  are  made  up  as  a  quadruple 
index.  The  top  lines  carry  the  tickler  dates.  Following 
lines  carry  names,  description  of  account  and  space  for 
condensed  correspondence.  The  cards  are  filed  alpha- 
betically, according  to  client's  names  and  lie  flat  in  the 
drawer.  A  tickler  divides  the  cards  in  each  drawer  so 
that  they  will  automatically  appear  on  the  date  wanted. 
Labels  attached  to  the  sides  of  the  cards  allow  instant 


96 


HOW  TO  FORCE  PATMENT 


reference  to  be  made  to  attorneys  or  debtors.  The  law- 
yers have  their  names  written  in  red  ink  and  the  debt- 
ors are  distinguished  by  the  use  of  black  ink.     A  small 


A 

B 

C 

D 

E 

F 

G 

H 

I 

J 

M 


t..(A.  J>JtUjAjLO/ 


Vc  ~  ''A  -  ^^  -    Vs 


T 


No.      /f6^ 


Red.   TTla^  /.  f9jl. 


Dealer      VS.  0.771.7/9/ 


C/uyi^^  jijudjj.  -  rltt 


Debtor 


<<V<^<^^^.gL>o^ .  y-tcu. 


DescriptioD     (BjUJ,  ^  ^'yj^.o^y  ^-T/^  90 


Sent  to  Atty.     1/9-  ^^.^.  .o,  aj 


N 

o 
p 

0 
R 


T 

u 

V 


FORM  III:     Instant  reference  to  client,  debtor  and  attoraeys,  is  allowed  by  this  cor- 
respondence card,  which  can  be  modified  to  fit  the  needs  of  any  collector 

company  can  adapt  this  system  by  filing  cards  accord- 
ing to  salesmen's  territories  instead  of  clients'  names. 

How  to  Follow  the  Out-of-Town  Collection  Attor- 
ney with  Best  Results 

Frequently  complaint  is  made  that  attorneys  rated 
high  as  collectors  are  lax  in  keeping  a  house  informed  of 
progress  with  the  debtor.  Very  often,  however,  lack  of 
report  is  due  to  legal  delays.  The  lawyer  handling  the 
case  expects  the  collection  manager  to  know  something 


USING  AN  ATTORNEY 


97 


about  the  time  needed  for  legal  routine  and  is  conse- 
quently irritated  by  letters  asking  information  before 
any  can  be  given.  Consideration  of  the  lawyer's  duties 
in  handling  accounts  will  save  time  and  anxiety  for  you 


Use  Your 
Collection  \- 
Lawyer  to 


Mediate  or 
Threaten  by 


^ 


Letters 


Personal  Talks 


Appear  in 
Courts  to 


Sue 


Garnishee 


Attach 


Watch  Property 

Records  of 
Delinquents  as  to 


Land  Transfers 


Wills 


*-      Incumbrances 


CHART  XIV:    Recognize  that  your  attorney's  position  enables  him  to  act  as  mediator 

or  prosecutor.    By  watching  public  records,  he  often  locates  attachable  assets,  real  and 

potential,  hidden  to  the  routine  collection  manager 

and  annoyance  for  your  man  of  law.  Each  period  of  a 
suit  is  followed  by  a  wait  of  from  ten  to  twenty  days 
and  lawyers'  letters  meantime  consist  of  a  mere  repe- 
tition of  news  which  has  gone  before.  Legal  routine 
varies  slightly  in  different  states,  but  the  account  which 
your  attorney  has  failed  to  settle  out  of  court  generally 
follows  this  final  course: 

1.  The  lawyer  notifies  the  customer  that  a  suit  is  to  be 
started  within  a  few  days.  He  waits  five  to  ten  days  for  an 
answer  and  settlement,  and  then — 

2.  He  files  a  precipe.  This  is  a  petition  for  a  summons 
by  the  court  and  is  accompanied  by  an  affidavit  as  to  the 
amount  due.  The  clerk  immediately  issues  a  summons,  which 
is  a  writ  issued  out  of  court,  signed  by  the  clerk,  and  com- 
mands a  defendant  to  appear  on  a  certain  date.  The  lawyer 
takes  the  summons  to  the  sheriff,  who  serves  it. 


98  HOW  TO  FORCE  PAYIVIENT 

3.  Ten  days  generally  elapse  between  the  time  the  sum- 
mons is  issued  and  appearance  day.  At  that  time  the  de- 
fendant can  get  from  five  to  ten  days  to  file  an  aflBdavit  of 
defense.  This  defense  may  be  legal,  such  as  an  appeal  to 
the  statute  of  limitations  or  it  may  be  a  defense  of  fact, 
such  as  a  denial. 

4.  On  the  day  set  for  trial,  the  court  hears  the  evidence 
and  enters  judgment  according  to  the  laws  and  facts. 

5.  If  the  judgment  is  in  favor  of  the  plaintiff,  execution 
Issues.  This  writ  directed  to  the  sheriff  commands  the  debtor 
to  pay  judgment  and  costs  to  the  bailiff  and  provides  that  if 
he  wishes  to  file  an  exemption,  he  has  ten  days  to  do  it.  If 
he  fails  to  do  so,  any  of  his  possessions  may  be  levied  on 
and  sold  at  public  sale  to  satisfy  the  judgment.  The  sale 
has  to  be  advertised  for  four  weeks  before  the  debt  can  be 
satisfied. 

By  listing  the  attorney's  duties  in  this  way,  you  can 
time  your  follow-up  and  thereby  show  an  intelligent 
consideration  of  your  man's  work  without  lessening  the 
pressure  necessary  to  keep  him  up  to  the  mark.  Whether 
you  select  your  attorney  from  lists  made  up  from  your 
experience  or  a  bonded  list  compiled  by  some  commercial 
agency,  keep  your  man's  interest  keyed  up  to  collection 
pitch  by  cooperation  and  helpful  suggestions.  Turn  the 
energy  formerly  devoted  to  the  debtor  into  channels  that 
will  help  the  lavtyer.  Follow  him  closely  but  sympa- 
thetically for  action. 


Part  IV 


HOW  TO  KEEP  YOUR  LISTS 
AND  RECORDS 


Kee'p  Down  the  Burden 

"C'ALSE  steps  in  selling,  in  credit  extensions 
*■  and  in  collecting  are  an  extra  burden  on 
the  collection  balance.  Successful  collection 
is  rooted  far  back  in  sound  credit  methods 
and  honest  salesmanship. 

Find  the  straight  line — keep  down  the 
weight — organize  your  credits  and  collections. 

Sell  satisfaction.    Grade  your  credit  risks. 

Then  line  up  to  the  dates  you  make  with 
dehnquents — teach  the  debtor  that  you  keep 
your  collection  promises. 

Make  the  man  whose  account  is  in  your 
collection  file  feel  that  his  card  moves  up  a 
notch  every  day — that  his  name  is  on  your 
desk  pad  at  the  proper  date,  for  your  personal 
follow-up. 

Show  him  that  your  thought  focuses  on  him 
every  time  his  account  becomes  due.  Train 
him  to  keep  step.  Make  him  measure  himself 
by  your  accuracy. 

Make  him  pay  by  the  clock  dial  of  your 
reminders. 

Collect  by  plan  and  schedule.     Don't  add 
I        and  carry  losses.     Keep  down  the  burden. 


oS 


■  ii: 


iia 


HOW  TO  KEEP  A  CREDIT  RECORD 


■  1  J    3  4    5    6    7    8    9  1011  12  13  14  15  16  17  18  19  20  21  22  23  24  2526  27  2829  30  31       LMT 


9lu^^  t^-.  (^ 


State 

3m.. 


^o^oUla^ 


^MJl 


Q.f   LH  &3 


Jll^ 


^^ 


'/i  V'^ 


lAj^ 


■^ 


Net  Worth 


Ability 


Exp.    '01 


'A 


— ^ili  Dates  of  the 
receipt  of  special 
credit  re  ports 
from  commercial 
agencies,  attor- 
neys.  banks  and 
trade  references. 
These  reports  clear 
up  knotty  prob- 
lems for  the  credit 
n.      The  Ire- 


icy 


itb 


571^ 


_pa-^ 


Record 


•0<) 


3tn-So  H50-tS  lil-fil 


-^ 


^ 
^ 


'f/O  ^JJ.d,.   SO"^     i//0(PS/u2.juJ 


vhicli 


reports 

have  bee>  asked 

3  a  customer  isaa 

ifidicadoo    of    bit 

iotesrity 


->(2)  History  of  account;  S700  order  ac- 
cepted January,  1907:  Notes  for  $560  run- 
ning to  Mch.,  1910.  received  in  Apr  . '07 
Series  paid  in  full  June. 'JO;  some  sent  to  at- 
torney fof  collection  June,  '08,  (note  in  red 
ink);Aug.  *08  opened  account  of  $45.60 
charged  to  bad  debts,  but  collected  later 
direct:  Jan.  "10.  firm  allowed  debtor  $50  on 
claim  considered  unjust;  May,  "10,  properly 
statement  asked  and  refused. 

-^'  (3)  House  ledgerexperience  sbowingtotal 
amount  of  business  and  highest  credit  limit 
with  customer  during  '07,  '08,  '09  and  '10. 

-^  (4)  Personal  history  of  customer;  morals, 
iocludtn^customer'sstandingas  to  honesty, 
integrity,  habits.  Abilitycarriessaroeclass- 
ification.  Business  record  shows  facts  as 
to  bankruptcy  anJ  judgments  or  may  be 
clear. 


''////fn'''//j 


Udger 
Past  Due 


mi 


J4jn 


.^J- 


Jil 


JH^ 


■a    vi" 


-»-(5)  Ledger  ac- 
counts past  due. 
la  Oct.  07.  $25 
was  past  due;  In 
1908  notes  were 
due  in  April,  May 
and  June.  Open 
Account  of  $4J 
past  due  inluly 
and  August,  1908. 

^  (61  Special  meov 
oranda  accepting 
extension  of 
credit.  Order  for 
$1000  accepted 
Dec  'It  to  be 
shipped  May  '11. 


(7)    Space  for  commercial  agency  reports.  These  show  the  successive  ratings  of  the  customer 
from  the  time  be  opened  his  account. 

'  (8)     Name,  address  and  business  of  customer 


I  pencil  when  the  credit  man  desires  to  refer  agaio  to  the  card 


-  (9)    Tickler  date*.    Checked  i 
at  a  certain  date 

(10)    Credit  limit;  figures  Indicate  that  a  limit  of  $75  to$100  was  set  Sept..  'It     Accounts  la  - 
arrears  must  be  sent  after  thirty  days  to  the  generol  office  for  collection. 


FORM  IV:      Records  which  permit  the  credit  man  to  make  accurate  de- 
cisions cut  down  the  percentage  of  bad  debts.  This  card,  used  by  a  Chicago 
wholesale   house,  carries   a  succinct  account  in   cipher  of  a  cuttomer's 
standing  and  trade  history 


III 


IIB 


CHAPTER  XIV 

How  Credit  Records  Hold  Down 
Bad  Accounts 

CREDIT  and  collection  records  will  reduce  bad  debts 
to  a  minimum  and  keep  bad  pay  orders  off  your 
books.  While  methods  of  keeping  lists  vary  according 
to  facts  which  require  emphasis  in  any  particular  busi- 
ness, whether  retail,  professional,  public  utility,  instal- 
ment or  manufacturing  and  jobbing,  the  general  prin- 
ciples underlying  record  keeping  are  the  same.  Make 
your  files  show  in  every  case: 

1.  The  business  and  social  record  of  the  prospect 
who  applies  for  credit. 

2.  A  condensed  record  of  the  customer's  business  re- 
lations with  the  house. 

Your  first  file,  in  greater  or  less  detail,  outlines  the 
customer's  ability,  responsibility,  morals  and  social 
standing  as  judged  by  his  neighbors,  by  banks,  by 
commercial  agencies,  and  as  noted  by  personal  observa- 
tion or  by  your  special  investigators.  The  second  record 
shows  amount  of  sales,  habits  of  payment,  past  credit 
records,  apparent  increase  or  decrease  of  customer's 
business,  activity  of  competitors ;  in  fact,  all  information 
on  which  the  banker  or  credit  man  bases  judgment  in 


102  LISTS  AND  RECORDS 

passing  on  any  application  for  a  loan. 

The  retail  storekeeper,  as  a  general  rule,  knows  his 
customers  personally  or  depends  upon  his  observation 
by  neighbors  and  clerks  to  keep  him  posted  on  the 
charge  buyer's  affairs.  Becavise  accounts  in  the  retail 
store  are  generally  small,  and  because  customers  are  as 


KAYNOR  BROS 
Fourth  and  Pearl  Sta. 

EUenstnirg 191  ..^ 

For  value  received  aod  jncQnsideratioD  tbatKAYNOR  BROS  sell  goods  and  mercbaadite 
upon  /•>«■<;««/»  of  I    ■ 

County  oi  _^_— ___-—__— ^——  and  State  of ,1 


do  hereby  guaraoteeto  saidJlAYNOR  BROS  the  paymeat,  at  nuturity.  ot  all  bill* 

of  good)  and  merchandise  so  sold  by  them  to  the  said from  timc^to  time, 

00  and  after  the  date  hereof,  uotU  written  notice  of  the  withdrawal  of  this  guaranty  has  been 

served  by upon  thetaid  gLAYNOR^BROS 

This  guaranty  is  executed  with  the  onderttaadiOB  that  liahiiify  shall  at  no 

time  exceed  — . .   Dolttl*. 


FORM  V:      This  guaranty  requested  when  the  worth  of  an  applicant  for  retail  credit 
is  in  question,  is  as  acceptable  as  a  promissory  note  in  protecting  an  account 

a  rule  unacquainted  with  business  ways,  you  will  care 
to  do  very  little  direct  questioning  of  the  applicant.  If 
your  preliminary  questions  develop  the  fact  that  the 
prospect  is  a  property  owner,  or  otherwise  ought  to  be 
able  to  pay,  ask  for  three  or  four  references — the  best 
are  names  of  other  stores  with  which  he  deals — and  let 
him  go.  In  case  you  doubt  the  worth  of  the  applicant, 
ask  for  a  guarantor.  The  guarantor  fills  out  a  blank 
(Form  V)  which  effectually  protects  the  merchant. 

Lay  the  greatest  emphasis  on  the  store  record  of  your 
customer.  Watching  it  will  develop  pertinent  credit 
facts  which  you  will  need  to  know.     The  retail  credit 


HOLDING  DOWN  BAD  ACCOUNTS 


103 


man  has  learned  to  depend  upon  a  record  of  goods 
bought  and  the  method  of  payment  as  a  final  check  in 
raising  the  credit  limit  or  closing  an  account.  Week  by 
week  figures  trace  the  buyer's  financial  health. 

How  the  Instalment  House  Credit  Man  Fixes  Upon 
the  Worth  of  a  Prospective  Custcmer 

Instalment  men  practically  reverse  the  methods  of  the 
retailer  in  keeping  credit  records.  Where  the  retail 
dealer  takes  people  on  trust  and  then  watches  their  store 


NAME.....Zx^..sZ. 
RESIDENCE. .  SjM.'Uh 
Change  of  tddrew.  .  }.K?J.  .?f 


au^. 


Busioess  AddraM  ..J.].  .ZiXsn/Uftf^.  ^i . 


Account  Opened ..ShAk^tHl^J'jJ.tL^.: 


Account  Closed  ... .. .. 

Reiil  Estate  .2^".7..'y:.r^.7?J( 


Reletencc. .  .•^/<^V^..  ?le^.  .Q^?-^'-^  . 
i3*-JWkA<.i<^=WVi&^ 


Tina  .JP..?(-?<^.. 


FORM  VI:     As  information  regarding  a  credit  customer  gathers,  it  is  5Ied  in  this  enve- 
lope which  carries  on  its  face  a  condensed  statement  of  its  contents 

transactions  to  get  a  measure  of  their  worth,  the  instal- 
ment man  makes  a  final  estimate  of  a  prospect  before 
goods  are  delivered. 

He  deals  largely  with  the  improvident.  He  usually 
operates  over  wide  areas.  Unable  to  keep  in  personal 
touch  with  his  people,  he  makes  a  searching  first  investi- 


104  LISTS  AND  RECORDS 

gation  of  character  and  worth  of  the  applicant.  Later 
the  size  of  a  regular  customer's  account  and  an  increase 
of  credit  depends  solely  upon  the  record  of  payments. 
The  collection  man  takes  one  plunge  and  learns  all  that 
he  can  from  his  experience. 


touo^ 

0«Tt 

ORDCH  NO. 

PURCHASC 

..TPA»M.     II 

BALANCE 

1 

NAMC 

AOORCSS 

OCCUPATION 

■ALCSMAH 

1 

DATE  out 

AMOUKT 

DATCPAIQ 

DATIOUC    1 

AMOUNT 

DATIPAIO 

DATceuc 

AMOUNT 

DATE  PAID 

FORM  Vnit    Prompt  payments  fix  the  credit  of  the  instalment  customer.  This  ledger 
card  easily  accessible  tells  its  story  to  the  credit  man 

Lead  the  instalment  house  prospect  to  buy  when  he 
enters  the  store.  Wait  until  after  his  order  is  taken 
before  bringing  up  the  question  of  credit.  Then  your 
salesman  may  put  the  questions  printed  on  the  back  of 
the  sales  slip  (Form  VII).  Before  your  customer  gets 
the  goods,  rigidly  check  the  references  he  gives  and  the 
statements  he  makes.  Question  neighbors  and  acquaint- 
ances and  probe  every  possible  avenue  of  knowledge. 

When  credit  is  decided  on,  make  up  an  account  card 
(Form  VIII)  for  the  customer.  This  gives  you  an  abso- 
lute guide  to  your  buyer  and  is  all  you  need  to  consult 
when  a  re-order  is  made.  Only  the  customer  who  pays 
his  bills  is  good.  If  he  does  not  show  up  as  good  pay, 
deny  him  further  credit,  unless  the  card  shows  that  some 


HOLDING  DOWN  BAD  ACCOUNTS         105 


CONFIDENTIAL 
Acquaintance  Blank 


Name  in  full    (not  initials) 

Husband      lA/xXL^Ay,^-^    ^i^vyuiX^ x>-^ 

Present  »^AAtcu>.  S  J  S.  /   C^^u^^uLl  QyiM^. 


Has  lived  there ZX'i^ years       -py-nyt^ months 

Previous  address         S^  Ji/ CcuoJ^'  ELa^j^  ^2o^ 

Lived  there TliA^n*/ years months 

Will  move  to '>VT. 


Married  or  Single -  Age  (about) . 

(If  single)  Living  at  home  or  boarding  . 


¥2. 


Where  employed:  ^"'^         ^K\<;(n  <i'  u^^lMa^^Juui^o L&_ 

Address         i' Cm   Tbfy    So^j.    Siy. 


What  Position    P -t^y^-.^/i-^^-t/M^  _  How  long  — /^    ■^a^a^\,4^ 
Former  employer:    Firm         {jjAxa/ZoX-   wyiAA^.. 


Address  .^  0  J.    .^^.^^t.^^  Um^/^ 


Relatives:  Name  . 


%r^y^^    slv,A'^J'AA./n^/    {j^jyCLL^'J. 


Address  -^'f"  3  I    TA9/ji^J..iy,^*itr,^,  (Zu/^ 


Name 


I^^^Lxtx'  .ol^^r-y^Ajl.^n.y  (^-Q-^.M-J jU-^-^'^lA^y 


Address  /VVf   $■    i>i=  j^^  S. 

Bought  on  Monthly  Payments  before  ? \kjSL. 

From  whom:      Firm  ______________ 


Address  . 


References:        Name (ZA-o,^i^/  /ito^A^rrU 

Address  T/^  O  t^Xv    S<Z 


Name. 


Address        /  ij  /.  a   f^cL.^L^^-ayL^i^ 


'  Monthly 

Price  $        J-Ji' 1st  Payment,  $        JS" WeeWy  %  JO 

RF.MABKS         ^lAU^^j.j  gy,^^.  t^ri'L^U^i.^^^JU^'^^i--.     JzU>-c^  fiULtfl^.- 


FORM  VII:    These  searching   questions   made  by  clerks  give  the  instalment  credit 
man  a  line  on  the  desirability  of  the  credit  prospect 


106 


LISTS  AND  RECORDS 


extraordinary  circumstances  prevented  him  keeping  the 
contract  he  signed. 

Keeping  Track  of  Dealer  Accounts  for  the  Manu- 
facturer or  Wholesaler 

Records  in  the  wholesale  house  combine  all  the  fea- 
tures of  the  instalment  and  retail  schemes.  An  applica- 
tion for  credit  requires  a  sweeping  examination  of  the 


STATEMENT 


rtRMNAMI  , 

A0ORC86 


PARTNCRS-  NAMES. 


coon  SINGLt  , 


I  BHOWINQ  OF^ 


I  EDWARDS  &  SON 


STOCK  ON  HAND. 

NOTES  AND  ACCOUNTS    <GO00> 

CASKONHANO. 


CMATTtL  MORTGAGE  ON  STOCK. 
OWING  ON  STOCn. 

BonRoweomoNET. 


Due. 

NOT  CUE, 


REAk  ESTATE.  EKEMPT 

REAk  ESTATE.  NOT  EXEMPT. 
OTHER  Pf  RSONAL  PROPERTT,. 
OTHCRASQETS 


TOW 


HOMOwmq. 


TOTAL  ASSETS. 


CNCUMSRANCEli  ON  MOMCSTCAD.  _ 

ENCUMBRANCE  ON  OTHER  REAL  ESTATE.  _ 
MORTGAGE  ON  OTHER  PERSONAL  PROPERTT. . 
OTHER    LIABILITJCS.  _ 


TOTAL  LIABILTIES, 


NET  WORTH, 


INSURANCE  ON  STOCtS 

HOW  LONG  IN  BUSINESS. 


4  OTHER  PROPERTY™ 
LESFORiPAST  VEAR  . 


n£reRENCEs:fr«« 


t  ABOVt  IS  COFtRCCT.  THA' 
lAiO    COWARDS  A.  SON  I 


i  CXCCPT  AS  ASOVK  G 


FORM  IX:     By  this  statement  of  assets  and  liabilities,^  the  wholesale  credit  man  hai 
definite  facts  upon  which  to  ba.se  judgment 


HOLDING  DOWN  BAD  ACCOUNTS         107 

prospect's  affairs,  in  which  the  credit  man  not  only  ex- 
hausts the  possibilities  of  personal  investigation,  but 
turns  to  his  many  outside  aids  for  help. 

Make  your  applicant  write  a  schedule  of  his  assets 
and  liabilities  (Form  IX)  in  as  great  detail  as  if  he 
applied  for  a  loan  at  a  bank.  Check  this  by  reports 
from  agencies,  banks,  lawyers  and  other  sources  devel- 
oped in  your  business  experience.  After  credit  has  been 
allowed,  keep  your  record  revised  by  additional  reports 
from  time  to  time  and  by  a  study  of  the  customer's  rec- 
ord within  the  house.  This  will  show  the  possibility  of 
expanding  business.  It  will  give  a  line  on  your  com- 
petitors and  act  as  a  barometer  of  business  conditions. 
It  will  determine  the  tone  of  your  collection  efforts  in 
case  your  man  falls  into  the  bad  pay  class,  and  will,  in 
other  ways,  help  to  eliminate  guesswork  in  regard  to 
credit  business. 

To  allow  the  transaction  of  credit  business  with  the 
deft  sureness  and  mathematical  certainty  that  prevents 
accumulation  of  bad  debts  requires  the  choice,  record 
and  study  of  significant  facts.  In  the  measure  that  you 
train  yourself  to  choose  vital  facts  and  read  them 
clearly  will  your  records  be  brief  and  helpful. 


LET  your  debtor  know  that  a  per- 
sonal interest  attaches  to  him — a 
real  personal  interest  that  is  not  meas- 
ured wholly  by  his  orders  and  his 
dollars.  — Daniel  Louis  Hanson 


CHAPTER  XV 


Making  Collection  Routine  Automatic 

PROMPTNE SS— Accuracy— Regularity '  '—the  three 
words  printed  on  white  cards,  and  occupying  prom- 
inent places  on  the  walls  of  the  credit  department,  con- 
tain the  essentials  of  the  collection  system  of  a  St.  Paul 
wholesale  house. 

The  concern  has  little  trouble  with  bad  debts.  Method, 
perfected  after  years  of  experimenting,  has  reduced  col- 
lection routine  to  automatic  system.  Reminders  and  cor- 
rections for  merely  careless  and  stupid  debtors  are 
standardized  and  the  time  ordinarily  spent  upon  them  is 
devoted  to  handling  accounts  which  are  shaping  towards 
serious  losses.  The  credit  man,  relieved  of  detail,  busies 
himself  with  schemes  which  will  bring  the  department 
up  to  a  point  of  greater  all-around  efficiency.  The  sys- 
tem rests  on  these  principles  of  collection : 

1.  Automatic  regularity  in  following  delinquent 
debtors. 

2.  Close  cooperation  between  bookkeeper,  cashier  and 
collector. 

An  invoice  is  first  enclosed  with  the  notice  of  ship- 
ment. On  the  first  day  of  the  following  month,  unless 
other  terms  of  sale  have  been  agreed  to,  a  statement  is 

108 


MAKING  ROUTINE  AUTOMATIC  109 

mailed.  Thirty  days  later  a  second  statement  is  sent  out 
with  the  conventional  "Past  Due"  stamp  upon  it.  If 
the  debtor  is  not  heard  from  in  fifteen  days,  the  book- 
keeper marks  the  ledger  page  with  a  red  clip  showing 
that  the  amount  is  in  collection.  He  then  fills  out  a  card 
(Form  X),  with  the  name  and  address  of  debtor  and  a 
statement  of  the  account,  including  any  information 
which  will  assist  the  collector  in  obtaining  settlement. 
The  credit  man  on  his  part  keeps  the  bookkeeper  posted 
as  to  collection  methods.  A  green  marker  on  the  ledger 
pages  show  that  the  debtor  is  in  the  bad  pay  class,  while 
a  black  marker  shows  that  the  account  is  precarious  and 
final  efi'orts  to  secure  payment  are  being  made. 

The  collector  in  using  the  cards  follows  the  debtor  at 
regular  intervals  of  fifteen  days,  A  check  mark  in  the 
blank  space  below  the  number  at  the  top  of  the  card 
shows  when  the  second  letter  is  to  be  written.  The  card 
is  kept  in  a  file  numbered  with  the  days  of  the  month, 
and  every  morning  the  office-boy  picks  out  the  cards  of 
the  day  and  places  them  on  the  collection  man's  desk. 
As  each  collection  letter  goes  forward  a  condensed  state- 
ment of  its  contents  is  noted  in  the  lines  marked  "in 
action"  and  the  debtor's  replies  are  "boiled  down"  in 
the  same  way. 

Before  the  new  system  was  adopted,  debtors  were 
angered  at  receiving  duns  after  having  paid.  To  avoid 
this  error,  a  summary  of  the  ledger  account  was  placed 
on  the  card.  The  bookkeeper  in  making  out  the  card 
shows  in  the  top  line  the  date  and  the  balance  due. 
When  remittances  are  received,  the  cashier  enters  them 
on  the  credit  column  before  turning  money  over  to  the 
bookkeeper.  In  this  way  collection  efforts  are  instantly 
stopped  on  receipt  of  remittance. 


110 


LISTS  AND  RECORDS 


MAKING  ROUTINE  AUTOMATIC  111 

Copies  of  letters  and  replies  are  filed  in  an  envelope 
(Form  XI)  for  detailed  study  when  desired.     The  top 


.....  1 

[ 

3 

6 

7 

9 

11 

13 

15 

17 

19 

21 

23 

25 

27 

29 

31 

TOWN 

N*MC 

successon 

eR*NCM 

FILE 

«N 

rce 

MAO 

.P« 

«.v 

JUNE 

JUL 

*uc 

SCPT 

OCT 

NOV 

oec 

.« 

FORM  XI:     Quick  reference   to  correspondence   is  necessary   in   handling   accounts 
Envelopes  with  double  ticklers  save  footsteps 

line  of  tickler  dates  refers  to  the  live  files,  and  as  long 
as  dates  are  checked  in  the  top  row  of  squares  the  cor- 
respondence is  kept  in  the  office. 


rOLIO                                1      LIMIT                                            DATE 

MONTH                             AMOUNT 

NAMC 

ncsiocNce 

ausiNcss 

Aooncss 

PMONE 

LETTEB 

COLLECTOn 

rOBWABD 

^„^  ^^ 

,.-. 

'— . 

-^            y 

\ 

FORM  XII:     Retail  cards  carry  in  addition  to  a  statement  of  debts,  three  ways  of 
showing  an  account  in  action 


When  an  account  becomes  dead  for  any  reason  the 
filing  clerk  notes  in  the  bottom  row  the  date  of  remov- 
ing correspondence  to  the  dead  files.  Correspondence 
that  has  not  been  handled  in  one  year  is  removed.  Year 


112 


LISTS  AND  RECORDS 


and  month  are  noted  in  the  proper  square  and  manu- 
script is  sent  to  storage,  where  it  remains  five  years  be- 
fore being  destroyed. 

A  retail  man  uses  a  similar  system  whan  making  mail 
collections,  except  that  in  order  to  keep  a  tight  rein  on 


KEEP  THIS  CARD 

Memorandum  of  Account 


Account  No.. 


7/.SS 


Total  amount  of  Contract, 
Amount  paid, 
Balance, 

Due  in  Chicago  the  first 
day  of  each  month, 


%   J/  — 


£^-0 


s 


<:>-e> 


Keep  your  record  of  payments  here. 


FORM  XIII:    Cards  sent  to  instalment  mail  order  buyers  are  ready  reminders  and 
allow  the  buyer  to  check  his  payments  and  prevent  disputes 

delinquents,  he  sends  a  second  statement  on  the  loth  of 
the  month  succeeding  date  of  sale.  As  telephone  and 
street  collector  supplement  mail  efforts,  the  retail  man 


MAKING  ROUTINE  AUTOMATIC  113 

uses  a  tickler  card  (P\)rm  XII)  which  has  columns  show- 
ing the  methods  of  collection  efforts. 

When  the  account  is  placed  in  the  hands  of  a  street 
collector,  a  special  card  is  made  out.  This  carries  a 
statement  of  the  account  on  its  face.    The  reverse  side  is 


As  our  low  prices  and  easy  payment  plan  depend  upon  regu- 
larity in  collection  methoda,  we  have  arranged  for  your 
conTenience  this  Uemorandum  of  Account  card. 

We  believe  that  you  would  prefer  NOT  to  he  annoyed  each 
month  with  even  the  simplest  kind  of  a  reminder  regarding 
small  payments  of  this  kind. 

It  is  therefore  suggested  that  you  keep  this  card  in  a 
place  convenient  for  reference  which  will  obviate  the  pos- 
sibility of  payment  being  overlooked  when  due. 

Yours  very  truly. 


FORM  XIV:  The  back  of  form  XIII  carries  this  notice  of  the  instalment  pajonent  plan 

for  brief  reports  by  the  collector.  When  the  account  is 
first  placed  in  the  collector's  hands,  he  gets  a  white  card. 
When  the  debt  gets  old,  the  white  card  is  replaced  by  a 
red  one  as  a  signal  to  "go  the  limit." 

Some  instalment  houses  successfully  use  duplicate 
statements  as  collection  records.  These  are  filed  in  the 
tickler,  to  appear  a  few  days  before  the  date  on  which 
the  debtor  has  agreed  to  pay.  As  a  result,  the  debtor 
gets  a  gentle  reminder  at  the  time  the  bill  is  due.  When 
he  falls  into  the  bad  pay  class  the  triplicate  statements, 
which  are  made  up  similar  to  the  wholesale  card,  are 
filed  in  a  special  drawer  and  the  collector  proceeds  by 
mail  according  to  the  system  used  by  wholesale  houses. 
When  debtors  can  be  reached  by  street  men  or  tele- 
phone, the  system  adopted  by  retail  stores  is  used. 

The  purpose  of  routine  collecting  is  in  its  last  analysis 
that  of  keeping  a  steady  hand  on  delinquents.  Like  the 
horseman  who  keeps  a  constant,  friendly  grip  on  the 
reins,  the  creditor  must  exert  an  even,  firm  pressure  on 


114  LISTS  AND  RECORDS 

the  delinquent.  An  experienced  driver  allows  the  colt 
to  prance  a  bit  when  in  the  driver's  judgment  it  is  nec- 
essary, but  he  never  uses  the  whip  unless  the  animal  is 
inclined  to  be  mean. 

So  treat  the  delinquent  debtor.  Humor  him  often, 
but  never  allow  him  to  go  back.  Arrange  your  system 
to  hold  him  constantly  to  your  purpose  —  paying  up. 
Save  your  personality  to  manage  hard  prospects  and 
untie  the  hard  knots  of  collection. 


Drop  the  Inefficient 
Debtor 

CONSIDERABLE  proportions  of 
profit  in  nearly  every  business  are 
lost  to  parasites  of  the  commercial 
world  whose  finances  are  rated  as  "No 
good",  who  from  sheer  inefficiency, 
lack  of  judgment  and  "push"  not  only 
inflict  serious  losses  upon  those  with 
whom  they  deal,  but  seemingly  get  no 
advantage  out  of  it  for  themselves. 

This  sort  of  a  bad  debt  should  be 
placed  in  the  hands  of  a  collection 
agency  and  is  the  sort  that  the  creditor 
is  pretty  sure  is  worthless. 


Part  V 


•^ 


CUTTING  COLLECTION 
COSTS 


Test  and  Temper 

/^HECKS  brought  in  by  your  third  or  fourth 
^^  letter  cost  three  or  four  fold  collection  ex- 
pense— plus  the  interest  on  capital  rightfully 
yours  but  unavailable  when  due. 

Accounts  followed  to  last  resort— even  when 
collected — pull  down  the  average.  Finally 
comes  a  point  where  cost  overshadows  returns. 

It's  the  collection  steps  before  the  successful 
one  that  knock  oflF  your  charge  account  profits. 

Test  those  steps. 

Temper  your  collection  tools  to  their  tasks. 

Find  the  best  letter — the  shrewdest  para- 
graph— the  cleverest  device — the  best  follow- 
up. 

Play  your  best  cards  first.  Cut  down  the 
follow-up  lists. 

Keep  discontented;  keep  trying;  watch  for 
something  new — more  intimate — more  personal 
and  far-reaching — more  profitable. 

Perfect  your  collection  schemes  and  crowd 
down  the  cost. 

Test  and  temper. 


uS 


■ii: 


:iiB 


SCORING  THE  EFFECTIVENESS  OF 
YOUR  COLLECTION  LETTER 


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FORM  XV:      Records  of  collection  correspondence  show  weaknesses  and 

strenKth  and  suggest  changes.    In  this  specimen  test  sheet  the  letter  keys 

are  (C)  for  open  accounts,  (N)  for  note  accounts  and  (I)  for  debtors  whose 

insurance  policies  have  lapsed 


■  ii: 


:iii 


CHAPTER  XVI 
Economies  That  Increase  Profits 


HARD-HITTING  collection  paragraphs,  according 
to  the  system  of  a  Philadelphia  correspondent,  are 
not  lost  after  their  first  use.  By  keeping  copies,  num- 
bering them  and  having  the  typist  make  up  routine  let- 
ters from  the  assortment  of  best  paragraphs,  the  corre- 
spondent has  cut  costs  within  his  department  one-third. 

The  correspondence  book  relieves  him  of  a  mass  of  de- 
tails. Routine  details  no  longer  require  him  to  dictate 
a  complete  letter  or  to  shrug  off  the  responsibility  with 
an  ineffective  blanket  form.  On  the  debtor's  card  or 
note  the  collector  jots  a  few  figures  as  9-17-24-33.  The 
letter  which  the  typist  makes  up  by  copying  the  para- 
graphs thus  referred  to  settle  a  claim,  discourages  a 
"give-up"  or  gets  action  on  a  questionable  account  in 
a  collector's  personal  style. 

Not  only  is  this  system  easy  to  establish  and  easy  to 
maintain,  but  it  is  one  of  the  most  important  ways  to 
save  money  within  a  collection  department.  The  letter 
book  permits  changes  within  the  department,  the  place 
to  be  in  when  throwing  the  brakes  on  the  cost  machine. 
Expert  credit  men  have  found  equally  effective  means 
to  economize  in  the  limitation  of  credits  and  in  knowing 

117 


118  CUTTING  THE  COST 

when  to  stop — in  fixing  a  policy  with,  regard  to  how  far 
a  claim  is  to  he  pushed. 

How  to   Organize  a  Paragraph  Book  System  for 
Your  Collection  Department 

A  correspondence  book  requires  a  few  hours  for  its 
preparation  and  several  weeks'  practice  on  the  part  of 
the  user.  The  process  is  simple,  however,  and  well  worth 
while.  One  credit  man  made  up  his  book  by  going  over 
old  collection  letter  files,  picking  out  the  most  forcible 
paragraphs,  revising  and  classifying  them.  Another  cor- 
respondent had  an  extra  copy  made  of  all  collection 
lettere  for  three  months.  At  the  end  of  that  period  he 
had  his  stenographer  cut  the  paragraphs  apart  and 
arrange  them  by  subjects;  going  over  these  personally, 
he  discarded  a  large  number,,  chose  the  best  and  worked 
over  the  phrases  to  insure  clearness  and  "you"  interest. 

In  each  case,  the  mass  of  paragraphs  was  then  pasted 
into  a  folio  book  and  under  titles  such  as  "Opening," 
"Close,"  "Complaints,"  "Claims"  and  other  subjects 
which  would  fit  the  stock  arguments  daily  advanced  by 
debtors  to  postpone  payment.  Each  paragraph  was  let- 
tered and  numbered  as  "0-1,  0-2"  for  opening  para- 
graphs and  "CL-6"  for  the  sixth  claims  paragraph. 
Answering  an  ordinary  collection  letter  with  the  para- 
graph book  at  hand  becomes  with  familiarity  a  matter 
of  jotting  down  the  numbers  of  paragraphs  which  fit 
each  case.  The  numbers  written  on  the  debtor's  letter 
are  copied  on  a  collection  card  and  prevent  repetition 
of  arguments. 

One  correspondent  who  uses  a  correspondence  book 
dictates  a  brief  personal  or  closing  paragraph  when  he 
particularly  wants  to  get  into  close  touch  with  his  pros- 


COLLECTION  ECONOMIES  119 

pect.  He  is  careful  in  this  to  make  some  personal  ref- 
erence to  the  debtor,  his  location  and  business,  or  to 
touch  some  intimate  point  which  will  get  the  reader's 
attention.  The  result  is  an  extremely  persuasive  letter. 
In  checking:  up  the  saving  made  by  the  correspond- 
ence book  system,  one  collector  found  that  the  paragraph 
notation  handled  one-third  of  the  letters  of  the  depart- 
ment, cut  off  a  correspondent  and  permitted  the  sub- 
stitution of  a  typist  for  a  stenographer.  The  combined 
saving  exceeds  $1,800  a  year. 

Comer-Cutting  Plrnis  Which  Eliminate  Lost  Motion 
in  the  Collection  Department 

The  correspondence  book  may  be  used  in  a  business 
of  any  size.  Selected  paragraphs  help  in  the  big  corpo- 
ration, but  in  a  smaller  concern  a  simpler  letter-form 
book  can  be  used  effectively.  This  combines  a  form  let- 
ter and  paragraph  book  and  is  used  when  duplicate 
process  letters  have  been  found  undesirable.  The  book 
is  made  up  of  entire  letters  which  handle  various  col- 
lections at  various  stages.  The  letters  are  specially 
copied  by  a  typist  in  every  case,  at  the  direction  of  the 
correspondent. 

Ingenious  correspondents  have  worked  out  many  other 
economies  only  less  important  than  the  plant  to  limit 
special  dictation.  Occasionally  the  employment  of  an 
attorney  in  the  collection  department  is  good  economy. 
A  correspondent  of  this  sort  eliminates  the  fees  re- 
quired by  the  outside  attorney,  reduces  legal  expense 
and  divides  the  commission  paid  the  collector  when  he 
is  compelled  to  send  an  account  outside  the  house  for 
collection.  He  is  under  the  eye  of  the  chief  credit  man, 
understands  house  policy  and  works  accordingly. 


120  CUTTING  THE  COST 

Tests  taught  a  St.  Paul  credit  man  a  variation  of 
the  house  attorney  scheme.  He  found  that  the  lawyer's 
letter-head,  more  than  his  letters,  induced  the  delin- 
quent to  pay  up.  Trial  proved  the  worth  of  a  new  plan. 
Final  collection  letters,  suited  to  house  system  and  house 
policy,  and  written  on  the  lawj-er's  stationery.  He  is 
paid  a  small  fee  for  the  balances  secured  in  this  way  and 
gets  all  the  court  work  of  the  collection  department.  A 
similar  plan  found  effective  by  test  is  to  pay  for  the  use 
of  an  established  collection  agency's  letter-heads  and  to 
write  house  letters  on  its  stationery.  The  agency  gets  a 
fee  for  the  accounts  collected  in  its  name. 

Other  ways  of  cutting  comers  continually  suggest 
themselves  in  a  well  ordered  collection  department.  The 
telephone  may  sometimes  be  used  as  an  economy  by  the 
retailer  who  can  build  up  a  tactful  talk ;  use  of  the  wire 
cuts  retail  costs  and  adds  a  direct  personal  touch  to 
collection  efforts.  The  street  collector  supplements  mail 
efforts  when  debtors  are  too  ignorant  or  indifferent  to 
heed  letters.  The  traveling  salesman  can  sometimes  con- 
nect with  a  customer  and  save  letter  writing.  He  soothes 
the  irritated  customer;  he  appears  as  the  special  emis- 
sary of  the  house;  he  flatters,  corrects  blunders,  and  by 
a  visit  when  the  house  is  at  fault  frequently  saves  a 
special  trip  by  the  collection  man  or  his  assistants. 

While  correspondence  books  and  other  methods  of 
saving  within  the  department  are  generally  first  con- 
sidered and  corrected  by  the  management  engaged  in 
paring  costs,  the  chief  economy  is  the  proper  selection 
of  applicants  for  credit. 

The  present  credit  manager  of  a  Boston  newspaper 
keeps  collection  losses  down  to  one-half  of  one  per  cent, 
although  four  managers  collected  only  sixty  per  cent 


COLLECTION  ECONOMIES  121 

of  outstanding  accounts.  The  newspaper  man  has  no 
mag:ic  wand  to  create  a  flow  of  dollars.  His  simple  rule 
is  to  refuse  credit  to  all  applicants  who  are  not  listed 
by  commercial  agencies  or  who  do  not  submit  a  satisfac- 
tory detailed  statement  of  their  resources.  If  investiga- 
tion shows  that  the  prospect  is  doubtful,  cash  with 
order  is  the  rule.  Business  which  does  not  come  up  to 
this  standard  is  refused. 

Backbone  of  this  sort  rebuilt  the  business  of  a  retail 
storekeeper  when  it  was  on  the  point  of  dissolution. 
Pacing  stiff  competition  from  the  start,  the  dealer  had 
granted  credit  to  doubtful  applicants  to  keep  their  trade 
from  rivals.  When  an  audit  of  his  books  showed  linger- 
ing accounts  which  should  have  been  net  profit,  he 
changed  former  policies.  Now  he  grants  credit  only  to 
persons  whom  he  knows  are  worthy  of  the  favor.  Doubt- 
ful applicants  are  politely  refused  and  if  they  threaten 
to  retaliate  by  trading  at  other  stores,  they  are  cheer- 
fully allowed  to  depart.  The  dealer  finds  that  his 
policy  practically  nets  him  two  profits ;  first,  the  profit 
of  goods  sold  for  cash  w'hich  would  be  lost  if  sold  to 
a  questionable  charge  customer;  second,  the  cost  of  the 
goods,  which  would  also  be  lost. 

Care  in  selecting  credit  customers  and  the  willing- 
ness to  see  possible  trade  pass  the  door,  smooths  out  the 
wrinkles  in  the  credit  man's  brow;  but  an  infallible 
choice  between  good  and  bad  prospects  is  impossible  at 
times.  If  the  bad  pay,  therefore,  gets  by  the  first  line 
of  defense,  have  a  second  line  ready  for  him.  Fix  the 
credit  limit  when  you  grant  a  customer  charge  privi- 
leges. Then  watch  him  and  hold  to  the  rule.  When  a 
customer  fails  to  pay  the  just  indebtedness  at  the  time 
agreed,  cut  him  off  unless  you  know  that  there  is  suf- 


122  CUTTING  THE  COST 

fieient  reason  for  his  action.  Hoping  to  be  paid  and 
letting  a  "bad  pay"  run  up  bills  in  the  expectation  of 
getting  money  that  has  gone  before  is  a  brand  of 
optimism  which  is  being  driven  out  of  the  retail  world. 

Let  no  man  get  on  the  books  without  a  searching  in- 
vestigation as  to  his  credit  standing.  In  addition  to 
aid  received  from  the  commercial  agencies,  wholesalers 
may  get  a  line  on  a  man  through  exchange  of  informa- 
tion with  other  concerns  or  through  the  use  of  banks, 
lawyers  or  special  investigators.  The  retailer  has  even 
better  credit  information  sources  in  his  personal  knowl- 
edge of  customers.  He  can  personally  check  up  state- 
ments made  by  the  customer  in  applying  for  credit.  He 
may  know  by  common  report  the  worth  of  a  prospect. 
Instalment  men,  by  closely  questioning  customers  and 
checking  various  statements  against  each  other,  exchang- 
ing information,  making  their  street  collectors  credit 
investigators  and  carefully  studying  the  information 
gained,  can  limit  the  amount  of  bad  debts. 

Profits  in  collection  hang  on  judgment — on  a  readi- 
ness to  let  the  other  fellow  have  a  prospect's  trade  when 
conditions  indicate  that  the  applicant  is  a  "something- 
for-nothing"  man. 

A  third  rule  in  profit  making  followed  by  credit  and 
collection  men  is  knowing  the  point  where  collect  efforts 
even  if  they  bring  in  money — result  in  losses.  To  know 
when  to  cancel  a  debt,  pocket  the  loss  and  add  another 
bit  to  the  experience  side  of  the  ledger  is  to  apply  the 
law  of  "diminishing  returns"  to  the  collection  problem. 
The  collector's  first  letter  yields  the  best  returns;  his 
second  letter  less;  his  third  still  less,  and  so  on.  As 
returns  decrease,  costs  increase,  until  the  place  is  reached 
where  costs  and  profits  balance. 


COLLECTION  ECONOMIES  123 

The  collector  who  knows  this  danger  mark  has  reached 
an  important  point  on  the  way  to  maximum  efficiency 
in  his  department.  There  are  several  distinct  policies 
as  regards  the  lengths  to  which  to  push  bad  debts  of 
various  amounts.  Some  collectors  spend  dollars  to  col- 
lect cents  and  figure  that  their  profit  is  the  educational 
effect  on  bad  pays.  Many  collection  managers  make 
severe  examples  of  delinquents  at  first,  in  the  effort  to 
establish  a  repTartation  for  carrying  accounts  to  payment. 
Others  keep  their  eye  on  the  number  of  accounts  col- 
lected rather  than  on  the  net  profits  of  collecting.  Study 
of  your  business  and  others  in  similar  lines  will  point 
the  way  to  a  policy  in  this  matter  which  will  work  out 
to  maximum  profit.  Tests  as  outlined  in  the  succeeding 
chapters  will  uncover  many  of  these  necessary  facts 
which  mark  the  profit  line  in  collecting, 


Selling  Collections 

IT  is  one  thing  to  induce  a  man  to 
take  something  he  wants — it  is  quite 
another  to  induce  him  to  give  up  some- 
thing he  wants. 

Therein  you  have  the  vital  difference 
between  the  sales  and  collection  letter. 

Collection  letters  turn  on  one  or  both 
of  two  points:  the  purchaser's  honor 
and  willingness  to  recognize  Golden 
Rule  principles;  his  obligation  to  do 
what  he  has  agreed  to  do. 


CHAPTER  XVII 

Tests  That  Show  Your  Strongest 
Letters 

TIRED  of  guessing  at  results  and  wearying  of  hc^j- 
hazard  excuses  which  failed  to  explain,  the  head  of 
a  Western  specialty  house  called  his  credit  men  on  the 
carpet. 

"See  here,"  said  the  chief,  "I  want  a  show-down. 
Higman,  the  works  superintendent,  lets  me  know  in  ad- 
vance what  our  output  will  be.  Allen,  the  sales  man- 
ager, lets  me  know  to  a  penny  the  cost  of  selling  goods. 
Let's  put  the  collection  department  on  the  same  basis. 
Find  a  way  of  trying  out  your  schemes  before  putting 
them  over. 

"I  want  figures — not  guesses^ — from  the  Collection  De- 
partment. I  want  to  know  in  dollars  and  cents  what 
returns  I  am  getting  from  my  investment  in  you.  I 
want  to  know  in  advance  when  collections  will  be  bad. 
Show  me  th  results  or  reasons  why.  Give  me  facts — 
not  fancip<~. " 

The  straight  talk  from  the  hard-headed  chief,  coupled 
with  a  review  of  the  records  of  the  factory  superintend- 
ent and  followed  by  a  few  days  of  mental  burrowing  for 
ideas,  resulted  in  new  methods  in  the  Collection  Depart- 

124 


HOW  TO  TEST  LETTERS  125 

ment.  The  system  which  developed  in  the  succeeding 
six  months  raised  the  average  of  returns  twenty-five  per 
cent.  Satisfactory  increases  from  the  Collection  De- 
partment have  been  shown  ever  since. 

A  collection  quota  based  on  records  of  previous  years 
is  now  set  for  the  credit  man.  Office  results  are  com- 
puted with  machine-like  accuracy.  Tests  have  charted 
the  way  so  accurately  that  failure  to  meet  the  month's 
quota  can  in  every  case  be  traced  to  some  influence  out- 
side the  credit  department.  The  scheme  which  does  the 
work  is  based  on : 

1.  Tested  contents  of  letters, 

2.  Tested  intervals  between  letters. 

3.  Tested  length  of  the  letter  campaign. 

Keys  and  Records  Which  Will  Point  the  Wm/  in  a 
Collection  Letter  Campaign 

Credit  men  prepare  a  letter  key  as  the  first  step  in 
measuring  collection  returns.  Many  ways  of  keying  have 
been  tried  with  success.  One  coiTespondent  signs  each 
collection  letter  in  a  series  with  a  different  name  and 
asks  the  debtor  to  refer  to  the  writer  in  replying.  An- 
other scheme  is  to  enclose  an  addressed  envelope  which 
has  initials  marked  on  the  back.  Some  houses  trace  re- 
sults by  asking  the  debtor  to  return  the  collection  note 
with  their  remittance.  Various  letters  in  a  series  may 
show  different  house  addresses.  The  bill  enclosed  may 
furnish  a  clue  when  returned  to  be  receipted.  If  all 
the  keys  fail,  the  credit  for  the  remittance  is  given  the 
last  letter  mailed. 

Returns  indicated  by  keyboard  letters  are  checked  on 
monthly  forms  (Form  — )  drawn  up  by  the  office  boy. 
Rule  a  letter  size  sheet  with  thirty-one  horizontal  lines 


126  CUTTING  THE  COST 

for  the  dates  of  the  month.  Then  draw  vertical  columns 
corresponding  to  the  number  of  letters  used  in  the  cam- 
paign. These  columns  may  be  divided  into  three  parts. 
The  space  at  the  left  shows  the  number  of  letters  sent 
out  during  the  day.  The  middle  space  shows  the  amount 
of  cash  received,  and  the  space  at  the  right,  the  num- 
ber of  replies  received  to  the  letter  on  the  one  day.  The 
daily  record,  used  in  combination  with  the  key,  will  de- 
termine most  of  the  facts  desired  in  relation  to  your 
collection  efforts.  Study  of  results  attained  will  show 
the  office  worker  efficiency  truths  which  will  materially 
raise  his  averages. 

tA  Seattle  man  who  tried  a  test  saw  that  the  third  let- 
ter of  his  series  ran  far  ahead  of  the  results  produced 
by  the  preceding  two.  A  study  of  the  third  letter  sug- 
gested that  it  had  an  argument  paragraph  containing  a 
subtle  and  seductive  appeal.  This  was  followed  by  a 
close  carrying  a  note  of  urgency  which  the  other  two> 
letters  lacked. 

Following  the  hint  brought  out  by  the  test,  he  substi- 
tuted the  third  letter  for  the  first  and  checked  the  results 
as  before.  Returns,  however,  did  not  fully  justify  the 
change.  Further  study  suggested  the  worth  of  the  open- 
ing paragraph  in  the  first  letter.  This  was  added  to  the 
argument  and  close  of  the  third  letter  and  made  up  the 
most  effective  letter  he  has  ever  developed.  The  tests 
secured  a  saving  of  time  and  routine,  stamps,  station- 
ery and  interest  on  the  deferred  payments. 

How  a  Credit  Man  Tested,  the  Value  of  Enclosures 
in  His  Collection  Letters 

In  another  section  of  the  country  a  mail  order  col- 
lector conceived  the  idea  that  a  selling  circular  would 


HOW  TO  TEST  LETTERS  127 

get  results  if  enclosed  in  the  first  collection  letter.  ITie 
office  council  scoffed  at  the  idea  of  selling  goods  in  con- 
nection with  a  dunning  letter,  but  the  collector  finally- 
won  permission  to  test  the  scheme  on  a  list  of  five  hun- 
dred letters.  The  idea  was  successful ;  tests  and  records 
— cold  figures — disproved  office  guessing  and  theories. 

"Whenever  a  wholesale  house  collector  on  the  Atlan'^ir 
seaboard  encounters  the  necessity  of  changing  the  te^i 
of  a  collection  letter,  he  writes  his  copy  and  submits  it, 
not  to  the  critical  whims  of  his  office  associates,  but  to 
some  of  his  debtors.  Often  the  tests  run  over  an  inter- 
val of  six  months,  but  the  records  so  secured  make  up  a 
table  of  results  which  allow  the  collector  to  predict  with 
certainty  just  what  his  average  of  returns  for  the  year 
will  be. 

If  the  time  between  collection  letters  seems  too  long, 
select  a  list  of  debtors,  key  trial  letters  and  send  them 
out  on  shorter  intervals.  Keep  a  record  of  results  and 
let  the  debtor  tell  you  by  his  payments  whether  the  new 
idea  is  a  good  one. 

How  to  Make  Your  Returns  frmn  Collection  Letters 
Prove  the  Value  of  New  Schemes 

The  greatest  danger  of  new  schemes  lies  in  depending 
upon  impressions.  Take  no  man's  opinion,  no  matter 
how  expert  he  is,  on  whether  a  new  scheme  is  good  or 
bad.  Try  it.  Selecting  the  list  is  merely  the  applica- 
tion of  business  sense.  Be  sure  that  it  is  representative. 
Consult  your  credit  records;  consider  the  time  of  test 
and  of  letters;  watch  locality,  race  and  creed;  note  the 
little  thing,  such  as  weather  and  season  of  year.  The 
time  spent  in  making  up  lists  for  trial  letters  will  pay 
for  itself. 


128  CUTTING  THE  COST 

One  man  found  the  value  of  selection  when  a  letter 
which  tested  well  in  the  city  failed  utterly  in  the  coun- 
try. Analysis  showed  that  the  crisp,  clean-cut  business 
talk  which  won  city  dealers  had  no  appeal  to  the  coun- 
try man  who  had  time  to  read  a  long  letter.  A  new  let- 
ter tested  on  a  country  list  accurately  forecasted  results, 
The  experiment  failed  the  first  time  because  the  differ- 
t-j-ce  in  temperament  had  not  been  considered.  Thus 
tests  mold  your  "copy"  to  suit  your  reader. 

In  another  business,  cause  of  failure  lay  in  the  differ- 
ence in  type  between  northern  and  southern  men.  Sim- 
ilarly, an  implement  man  who  was  about  to  reject  a  let- 
ter which  pulled  in  tests,  but  which  failed  in  practice, 
reconsidered  his  action  at  the  thought  that  the  tests  had 
been  made  in  an  off-season  while  letters  had  been  mailed 
during  the  farmers'  busy  months. 

Tests  demonstrate  the  folly  of  blindly  following  prece- 
dent and  routine.  They  point  with  unimpeachable  accu- 
racy to  good  and  bad  letters.  Tests  show  costs,  estimate 
returns,  detect  blunders,  check  mistakes.  Tests  turn  on 
the  light  in  the  collection  department.  The  records  are 
the  proved  charts  by  which  the  course  of  the  collection 
correspondence  may  be  accurately  laid. 


PERSONALITY  furnishes  the  key- 
note to  every  business  proposition. 
Men,  not  money,  are  the  determining 
factors  in  commercial  and  industrial 
undertakings. — Frederick  W.  Upham 


DATE  DUE 


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